Doug DeLieto - Former Vice President of Investor Relations Robert A. Bruggeworth - Chief Executive Officer, President, Director and Member of Corporate Development Committee Steven J. Buhaly - Chief Financial Officer Steven Eric Creviston - President of Mobile Products James L.

Klein - Former Vice President of Infrastructure & Defense Products and General Manager of Infrastructure & Defense Products.

Vivek Arya - BofA Merrill Lynch, Research Division Michael A. Burton - Brean Capital LLC, Research Division Steven Smigie Edward F. Snyder - Charter Equity Research Harsh V. Kumar - Stephens Inc., Research Division N.

Quinn Bolton - Needham & Company, LLC, Research Division Cody Grant Acree - Ascendiant Capital Markets LLC, Research Division Blayne Curtis - Barclays Capital, Research Division Thomas Diffely - D.A. Davidson & Co., Research Division.

Good day, and welcome to the Qorvo Inc. Q4 2015 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Douglas DeLieto. Please go ahead, sir..

Thanks very much, Travis. Hi, everybody, and welcome to the Qorvo March 2015 earnings conference call. This call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations.

We encourage you to review the Safe Harbor statement contained in the earnings release published today, as well as our most recent SEC filings for a complete description.

You should also read and consider the risk factors associated with each of the businesses of RFMD and TriQuint in each company's most recent annual report on Form 10-K filed with the SEC because these risks may affect the operations and the financial results of the combined company.

In today's release and on today's call, we provide both GAAP and non-GAAP financial results.

We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain noncash expenses or unusual items that may obscure trends in our underlying performance.

During our call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For a complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today, available on our website, www.qorvo.com, under Investors.

[Operator Instructions] Sitting with me today are Bob Bruggeworth, President and CEO; Steve Buhaly, Chief Financial Officer; Eric Creviston, President of Qorvo's Mobile Products Group; and James Klein, President of Qorvo's Infrastructure and Defense Products Group. I'm also joined by other members of Qorvo's management team.

And with that, I'll hand the call over to Bob..

Thanks, Doug, and good afternoon. I'm pleased to welcome everyone to Qorvo's Fiscal 2015 Fourth Quarter Earnings Call. Just 4 months into the merger of RFMD and TriQuint, Qorvo is accomplishing what our 2 organizations could not have achieved individually.

In mobile devices, infrastructure and defense applications, Qorvo is uniquely positioned to connect people, networks and things, both wirelessly and over global wired networks.

Our financial results for March and our June quarterly guidance clearly demonstrate the integration is progressing exceptionally well and the Qorvo team continues to find new ways to build upon our shared strengths.

Our markets are robust and our new product launches and customer design activity point to significant revenue growth throughout calendar year 2015.

In addition, we are confident in our ability to deliver a run rate exceeding $75 million in synergies exiting this calendar year, and we see a clear path to a run rate of greater than $150 million in synergies exiting calendar year 2016.

Qorvo is leveraging our expanded portfolio of best-in-class products and technologies across growth markets and we're helping our customers to design, manufacture and launch their products more quickly and more efficiently.

We're also capturing incremental growth opportunities across diversified applications that favor our process technology expertise, engineering and manufacturing scale, advanced packaging capabilities and other unique competitive strengths.

It's worth noting that Qorvo offers the most complete product portfolio, targeting the highest growth segments of our market, including filters, switches and tuners.

Qorvo is recognized globally in each of these categories as a performance leader and there's no company better suited than Qorvo to capture revenue in either discrete or integrated implementations.

Whether you're talking about the Internet of Things, the connected car, wearables, tablets, smartphones, smart homes, radar, avionics systems or communications infrastructure, we've got more tools and a deeper set of skills, and we're capitalizing on our unique set of competitive strengths to deliver highly differentiated, high-value solutions to industry leaders and transformative growth markets.

This positions Qorvo to outpace the rate of growth of our underlying markets and deliver superior financial results. Looking at the March quarter. Revenue increased 46% year-over-year to $634 million when comparing to RFMD and TriQuint on a combined basis. Revenue growth was led by mobile products, which grew 61% year-over-year.

Qorvo's gross margin was 50.4%, operating margin was 26.8% and earnings per share were $1.11. Revenue gross margin and EPS were all well ahead of our original guidance. Supporting this strong performance, the demand for mobile data continues to explode.

Qorvo is a leading beneficiary of the robust growth in data traffic and we enjoy strong participation in the highest volume, highest value devices across the mobile infrastructure and defense markets. In particular, I'd like to highlight some of our more exciting strategic achievements during the quarter intended to diversify and grow our revenue.

Qorvo secured a design win with a major base station OEM with a 3.5 gigahertz MMPA who began field trials to support major operators in China, Europe, Japan and North America. Qorvo launched a broad family of multimode PAs and duplexer modules covering major cellular bands for the small cell base station market.

We were selected as the primary supplier of 802.11ac 5 gigahertz PA for a next generation .11ac wave 2 chipset. We enjoyed increased design traction on leading mobile Wi-Fi reference design, including Wi-Fi front-end solutions, integrating active components and filters into a single placement.

We launched production of our high-performance GPS LNA filter modules for a leading fitness wearable device manufacturer. We secured our first received diversity module design win in support of a flagship Android smartphone scheduled to launch in the second half of calendar year 2015.

And finally, we received production orders for our RF flex solution, supporting a next generation octa-core 4G chipset, with shipments commencing in the current quarter.

I'm quite proud of the Qorvo team and their ability to achieve these many accomplishments, while also executing on our internal initiatives targeting growth, diversification and margin expansion. Simply stated, it's our goal to drive revenue, diversify our revenue and earn more money off that revenue.

To that end, we're making steady progress towards our goal of bringing up our second facility in China to in-source the assembly and test of legacy TriQuint products, and we expect to begin shipments in the December quarter.

We're also leveraging our combined strengths to open new avenues of growth, many of which are coming in the form of highly integrated RF devices. Qorvo's Wi-Fi front-end solutions integrating active components and filters, and our received diversity modules are both excellent examples.

In the case of our received diversity modules, we've combined 2 of the fastest-growing functions in RF, premium BAW filters and high-performance, high throw count [ph] switches and highly integrated compact single placements.

This makes them unique in our industry and are intersecting customer demand at the right time, as smartphone manufacturers increasingly migrate from SAW to BAW to solve the interference challenges of higher band count and carrier aggregation.

From a very high level, we believe we're just beginning to demonstrate the value of bringing our 2 companies together, and we expect to build on that as we realize the full run rate of our cost synergies and introduce new products and technologies we could not have achieved individually.

In summary, our March quarterly performance, coupled with our June quarterly guidance and our expectations for a very strong calendar second half point to an exceptional first year for Qorvo. We're building momentum and we believe we can continue to build upon our financial performance in calendar year 2016.

Qorvo is well-positioned to win more than our share of the industry's highest growth opportunities by leveraging our diversified product portfolio, systems-level expertise, R&D and manufacturing scale and internal assembly and test capabilities.

We expect to continue to improve our financial performance as we invest in building a wider technology moat, supporting better-than-industry growth, greater diversification, a richer mix of new products and an expanding gross margin. And with that, I'll turn the call over to Steve for further color on Qorvo's financial performance.

Steve?.

quarterly revenue in the range of $660 million to $670 million; gross margin approximately consistent with the prior quarter; a tax rate in the range of 10% to 15%; and diluted earnings per share in the range of $1 to $1.10 on about 154 million shares.

We're confident we can outpace our markets this year and our guidance for June implies a robust 5% sequential revenue growth. Solid operating leverage is expected to drive operating income up about 10% sequentially.

During FY '16, we believe our tax rate will increase from a minimal level of the past to a more sustainable tax rate as recent profitability has consumed much of our remaining net operating losses. Actual quarterly results may differ from these expectations and such differences may be material.

Finally, we currently expect to report June quarter results on July 29. With that, we welcome your questions..

[Operator Instructions] We'll take our first question from Vivek Arya with Bank of America..

My first question, Bob, how should we think about seasonality in the back half? If you could give us some color around visibility, around content or design wins. I know in the past, when I look at the pro forma models, the combined companies have grown at least about 20% in the back half calendar year versus the first half.

Is that still a reasonable expectation for this year?.

Thanks, Vivek. Thanks for your kind words and your question. As far as seasonality goes, number one, we have very good visibility into the major launches of marquee phones from multiple customs -- customers throughout the back half of the year.

As far as what the industry is going to perform and how many phones actually get sold and all that, tough for us to handle at this time. But I think a high-level premise of the seasonality that you typically saw between the 2 companies, not much of that has changed yet.

We are just really releasing, as I talked about in my opening comments, some of the newer products that we believe we can layer on top of what we typically had done to change that profile. But as a starting point, Vivek, that's a great model that you threw out there.

The real thing is what's the industry going to do and it's way too early to comment on that, but thank you..

And as my follow up, maybe one on gross margins, almost 300 points better than we expected.

I'm curious, why such a big delta? And now that you have achieved your long-term gross margin target in the weakest seasonal quarter, what's next, is it time to rethink the target model?.

Yes. So first, it's tempting to take you up on that rethinking the target model, and we wouldn't be thinking lower. We'd be thinking higher. But just to be clear -- but that model is for full year. We like a little bit more time to execute against that and really deliver that on a full year basis. But your point's well taken.

With respect to the margin in the quarter, I think one thing that helped that you might not have thought of is, this is the seasonally low period for mobile. And as you know, our IDP revenue has a higher inherent margin. And so the weighted average benefits from that in the March quarter.

Also, a thing that was better than we expected was manufacturing yields, really stepped up in the quarter. A real tip of the hat to all our manufacturing team and the engineers who contributed as well. We saw some really good performance there. And then of course, synergies are starting to contribute to the model.

And it's always a little bit of a question how quick they'll come in. But we did make some good progress in the quarter and I know you know this. But synergies tend to be cumulative as we go through the quarters and I think we're off to a pretty good start there..

Okay, one last quick one, if I may. What is the right mix. If I look long-term off your Mobile versus the Non-mobile business and what role Bob do you think M&A could play in that? Because you have a very solid balance sheet. You are generating a good amount of cash.

How do you put it to better use through diversification and non-mobile markets?.

Thanks, Vivek. As far as looking at the 2 businesses today, I mean, you guys can do the math and I won't embarrass myself by telling you the percentages. But it's quite clear that the mobile business is a little bit bigger than the IDP business and growing a little bit faster.

So obviously, if we're active in M&A opportunities and looking at targets, they would tend to be more in the IDP-type of business [indiscernible] build that up. There are still areas of opportunities within the mobile business as well to acquire technologies or smaller companies that we can enable new products and things like that.

So I would say we will and we are looking at opportunities in both businesses. But I think over time, if you listen to our talk about continuing to diversify our products, our markets and our technologies, that's going to tend to lean a lot more towards James' IDP business..

We'll take our next question from Mike Burton with Brean Capital..

Looking at the June quarter guide, the mobile environment has definitely some areas of strength on the high-end with Apple and some weaker reports on the lower mid-tier.

Would you describe the strength you're seeing in the June quarter as broad-based or is it more concentrated in China per se versus the top tier?.

Yes, thanks for the comments, Mike. At a very high level, I mean, what we are seeing is what's everybody knows, the RF market place is still extremely strong. It's really the macro shift to 4G. And I think most people know that a lot of that is being done in China through multiple customers.

I mean, diversification across their end products and customers. So that's what's really starting to drive that growth..

Okay. And then following up on Vivek's question, I know you're not going to raise your margin target yet for us. But I'm just wondering if we could -- what we should be thinking about for a contribution margin another seasonal strong second half.

And that also, on OpEx side, Steve, I think you guys have spoken about a lot of the synergies really starting to hit in the second half.

Any puts or takes we should be thinking about as we -- as we go on to the second half of this calendar year?.

Yes, sure. On gross margin side, I think you should model a fall-through of 55%. I think we can execute to that. And with respect to operating expenses, we will see some synergies. We also may make investments. Those are really contingent on the level of business we're able to earn.

And I think you'll see us continuing to drive towards our business model of 50, 20, 30..

We'll take our next question from Steve Smigie with Raymond James..

One thing you mentioned a few times is obviously the -- that LTE will be a big driver of success for you.

Can you talk about what your mix is of LTE or 4G versus 3G at this point?.

This is Eric. Speaking for mobile. We have, now, well over 95% of our revenues in 3G, 4G. We don't break out between them because we have a lot of components which are used in both.

But it's clearly LTE that's driving due to not only the proliferation of LTE throughout China but also just the overall content growth in literally all the markets that are running LTE today..

Okay, great. And you had mentioned a number of good Wi-Fi and other wins.

Can you talk a little bit about how big Wi-Fi opportunity is for you? Or what is the percentage of revenue and how big do you think that opportunity can be going forward?.

I think what I will do, Steve, is since we've got Wi-Fi split between Eric and James, I'll let them talk about what's driving their business from a Wi-Fi perspective.

Because we did talk about pretty exciting products for both groups in our prepared comments as well as in the press release -- James, you want to talk a little bit about Wi-Fi?.

This is James. Thanks for the question. I mean, we're seeing 2 dynamics that are really helping us grow in the Wi-Fi market on my side of the world. The shift to 11ac has certainly been very beneficial for us and we're also seeing the carriers drive to more offload on Wi-Fi in high-density areas. So both of those dynamics are really helping us grow.

Of course, we're excited about new set of product that we've got released and being on some key reference designs in 5 gigahertz or higher power areas. So it looks good so far..

And then on the mobile side, it is one of our largest growth drivers this year in terms of just the overall opportunity. It's about $1 billion opportunity out there in mobile Wi-Fi for us. And we're doing really, really well with some differentiated technology on the filter side.

And the part that we announced as one of the strategic highlights is something very similar to RF Fusion and what we do in the cellular modem, but this is in the Wi-Fi front end for mobile in which we combine all the power amplifiers, switches and those differentiated filter components into a very compact, single-placement, high-performance solution, and we're seeing participation now across the major reference designs and we're confident that's going to lead to revenue in the second of fiscal year..

We'll take our next question from Edward Snyder with Charter Equity Research..

Steve, could you please remind us where we are on the BAW filter expansion and how much that had an impact on the quarter gross margins? You saw a really good margin but you named several things including synergies. I'm just trying to go figure on where you are and what the official line is on that.

I know you said double BAW capacity between, say, December of last year to June 1, and then at NWC [ph], there was some talk about tripling it. Just want to get an idea of where you are, what kind of impact that had on the big picture.

And then for Eric, in mobile, are you still shooting -- overall, are you still shooting to maintain a more even exposure to some of the bigger handset OEMs? I think we had talked at one point of like 5 20, 20% for Sam's, 20% Apple, 20% leading Chinese OEM, 20% white label.

Is that still your goal and are you structuring the new company in order to achieve that by deemphasizing some guys and focusing more on others? And then James, real quick, TriQuint has a real strong offering in 5 gigahertz, Wi-Fi amp, some couple of years ago. But they seem to deemphasize that late last year.

Is that where you're seeing your advantage in 5 gigahertz Wi-Fi? Or is this -- this new HBT 5 process that's helping out?.

Thanks, Ed. I appreciate you getting everybody involved. Steve, if you want to take the first one that had to do with that BAW filters expansion, and where we are on that ramp..

Thank you. Glad you remember that, Bob. In terms of BAW filter capacity, we are continuing to execute the aggressive ramp in capacity that we've been talking about for some time.

We expect this phase to wrap up close to the end of this quarter in preparation for a seasonally stronger revenue period and higher demand period that we will see in the second half of the year. And we feel very good, it's going very well. As you know, it's fairly fungible. We're adding equipment as we go and increasing capacity somewhat linearly.

So it's not like a Big Bang event. And it's going very well and we're very pleased with it. And I think we'll be well-positioned to serve the growth in demand that we expect to continue to see..

Does it have a big impact on margins this quarter, Steve?.

Not really, no. A little bit, but not materially. We don't depreciate the equipment until it's put into service. And the bulk of equipment actually placed into service will be in the current quarter..

Right. So I'll talk about target exposure to customers, if I understood the question, right? As a -- just a high-level strategy, I suppose, we want to be broadly exposed to the market, which means we want the share of our revenue that each customer contributes to be roughly equal to the share of their opportunity.

So we're not looking to overweight or underweight on any particular segment or customer. But probably, far more important than that, is we're operating to a very disciplined financial model. We're constantly seeking ways to grow the topline while improving profitability and that happens at the product level, not at the customer level.

A lot of our products which are highly profitable cut across most of our customers, frankly. So we're looking for those opportunities. That's what we're prioritizing in our investments where do we get the highest profitability and the highest growth. And how do we continue to hit the financial model..

James, you want to talk about a little bit of Wi-Fi and 5 gigahertz?.

Yes, and I think it's important to notice, to think about this a little different. I'm going to really focus you on the CPE side. So we're going to talk about Gateway and enterprise predominantly. Our focus has been in this 5 gigahertz area. So we've recently released what we think are the industry-leading set of components and those PAs.

And we continue to develop those products. So I -- not really focused on the back, on the past and us getting out, I think we are very, very focused on that market and we've got some great products..

And does this have anything to do with HBT 5?.

Well, as always, we continue to develop new next-generation technologies and focusing on investing and make sure that we've got the best processes in the industry. So that next generation of HBT will certainly play a role in this part of the market..

We'll take our next question from Harsh Kumar with Stephens Inc..

A lot of semi-companies are missing numbers, so really good to see you guys doing so well. I want to go back to the gross margin. To Vivek's point earlier, it was almost 300 basis points higher.

I want to kind of understand what if there was any role that the cost cuts played yet and what roles? And so continuation of that question is, what are some of the major things that are planned? I think you've sort of officially just upped your expectation for cost cuts to a little over $75 million.

I want to understand what are some of the major projects that are underway, maybe the top 2 that -- if you want to highlight them..

Yes, sure. I would be happy to. I think sooner rather than later, earlier on, we should see savings in the supply chain. In particular, we do see some management efficiencies, if you will. And those are fairly -- we were able to get to those fairly quickly.

I think a very significant initiative that will be partially in place this year, mostly in place in the second calendar year will be the migration of TriQuint's mobile parts into a new Chinese factory for assembly and test. We think that will be significant driver of improved margins and savings for us. So those are a couple of the bigger hitters..

Got it. And then, what about the margin question? The 50% or so margins that -- and then again, I'm not complaining because those are great numbers.

But just want to understand, if cost cuts yet have played a function already or it's all on the [indiscernible]?.

Yes. Some of the supply chain savings came in to effect, pretty shortly after the merger was effective, right? [indiscernible] helped us out a little bit, gave us some extra time to prepare. We did take advantage of that. And we were able to implement some of those savings almost immediately after the close.

And so we did see benefit there and, as mentioned earlier, some business unit mix benefits with mobile being seasonally weak in the quarter. Some mix benefits within that, with the strength in filters and switches. Higher growing parts of the business. And finally, yields really got better.

The team just did a really good job on driving waste out of the manufacturing process with better yield..

Yes. And Harsh, that may not sound like it but that was a lot of sharing back and forth between the 2 organizations on how to improve yields..

Got it, got it. And as a follow up, if I can ask you, I think China was -- the data from China seems to be a little bit off in January and February. Your competitor mentioned that things picked up substantially in the March timeframe.

Could you just comment on maybe what you guys are seeing at a ground level in the Chinese market, maybe relative to expectations and guidance for June and then even beyond?.

Yes. I think, Harsh, the quarter pretty much played out as we expected, except near the end of March, things did start to pick up. We're continuing to see that. And that's what playing into our guidance. But I'll let Eric give a little more color, if you want..

I think that's pretty much it. We said in January, we expected to be kind of slow until we got through the lunar New Year and then it would pop up but with the late lunar New Year, we weren't sure how much exposure we'd see in March. But it did turn up at the very end of March to start picking up.

We've seen that continue into this quarter and the year is still looking to be very much on track. There's a lot of excitement about growth there and the 4G rollout, as you know, the net adds have been running averaging about 20 million a month for 4G in China. So right now, the market's pretty robust.

There's going to be a need for a lot more 4G handsets. And we've got a tremendous opportunity for content growth there..

Harsh, Harsh, I do want to point out that there was also some talk lately from a couple of people about a slight slowdown or a pause or a break or whatever you want to say in the infrastructure market. We actually had a very strong first quarter -- or excuse me, March quarter in the infrastructure market.

And for the first quarter, we think that's going to be down, down some quarter-over-quarter. So we are seeing a little bit of a slowdown on the infrastructure side..

And I know we're in the community that believes it's an inventory issue. We think the underlying demand drivers are well intact. And it's a matter of timing and what we do expect a little bit of a burn-off period here in the June quarter. And we've incorporated that into our guidance..

And to reiterate that, that's in the infrastructure side..

Infrastructure side of the business..

We'll take our next question from Quinn Bolton with Needham & Company..

Just wanted to follow-up on Harsh's question there about China. If look at the -- one of your big name partners [indiscernible] looks like they have a fairly soft first half but are talking about $450 million smartphone chipsets which implies a very strong second half, I think up over 50%, half on half.

Just wondering, as you look past June, are you seeing sort of a similar strength in second half versus first half or do you think your growth is going to be a little bit more linear through the year? And then as a second follow-on question for Steve, Steve, you talked about that tax rate stepping up to a range of 10% to 15%.

But then you made a comment about a higher tax rate long-term as you've now used up most of the NOLs.

Is that higher rate 10% to 15%? Or do you think it could step up beyond 10% to 15%, say, 1 year or 2 out in the future?.

Why don't I take the tax one first. So what's going on in '16, we have 2 kind of contravening items.

First, we're in the process of implementing a tax structure and RFMD, and it's similar to what TriQuint just had in place in the past where we had Singapore as our international headquarters and recognized the international revenue in that jurisdiction. And we won't have that in place until probably August 1.

So there's a little bit of a higher than normal impact there. On the other hand, we still have some remaining NOLs. So those are offsetting each other to some degree. I think the rate beyond FY '16 is still an open question. Our [indiscernible] tax is entering and I have some work left to do.

A lot of it depends on where revenue gets recognized, different jurisdictions, where we sell out, what the mix of products is. But I think that we'll-- it's hard to say. It's possible it could creep up just a little bit. But there's plenty of work left for us to do to get a better answer for you.

So this year though, we feel like the cash rate will -- or non-GAAP rate will be in the 10% to 15% range..

Thanks for the additional color Steve..

Eric, you want to take it?.

So I guess regarding the China question. We can't say a whole lot more than we already have. I mean MediaTek's pointing towards a good back half. We agree. As Bob said at the beginning, it's too early to call the back half. But some of the things to look for are continued 4G net adds.

Also, I think the export market is going to be pretty important to our China customers this year. And of course, MediaTek's open to help drive some of that. We're very well-represented.

We mentioned the strategic highlights, both new 4G smartphones for -- these are leading flagship smartphones that are launching now which will be in full production throughout the year. And which we've got multiple dollars of content and then in addition to that, our first RF flex. We just announced this in Barcelona.

We've got production orders already. We're ramping shipments right now as we speak. And so we'll have a full half year the second half of the calendar year to be shipping that RF flex solution. So yes, a lot of things to be excited in there in that market..

We'll take our next question from Cody Acree with Ascendiant Capital..

Eric, maybe on a road map basis, now that you've got the assets, the 2 companies put together, how is that impacting your longer-term roadmap for products and -- I think about from a maybe an RF Fusion or a module-integration strategy, how long does it take before we start to see some of those products on the market?.

Yes. Thanks for the question. I can tell you, it's a very target-rich environment, right now. We literally have all the pieces we need now that we put the company together. As you can imagine, the things that we're selling right now are still basically the roadmap of the previous companies, the legacy companies.

The diversity received modular, I mentioned in the strategic highlights, probably one of the first examples of a new product category that we're able to address as Qorvo which wasn't that attractive. Again, we're executing on this financial model. You looked at that model as separate companies, didn't really fit so much.

But there's a couple of reasons why that's exciting to Qorvo. One is that it combines the best-in-class switching with also, now, filters and LNAs as well.

And we think this is a great opportunity, it's about $1 billion segment today that should double over the next 3 years and we're essentially not playing it all until we have this launch this fall, obviously a design win we announced.

So that's one example of a new product area where we think we can really differentiate by bringing BAW technology into that segment which is all SAW today. And there's a lot of other examples. RF flex infusion, as you know, we're really helping to drive the integration levels higher in the industry.

We're working out multiple generations now with not only our key customers but probably more importantly, all of the major platform providers.

And the trend is crystal clear, it's about integration, it's about enabling real proliferation of high-performance compact [indiscernible] systems and it's the core technologies we bring in switches and filtering, power management system architecture, that's what enabling it.

So target-rich environment, we got a lot of opportunities, we're focusing on where we think we can grow and be the most profitable..

And then maybe Eric, just following up on both tracking and carrier aggregation, can you just talk about maybe where we are and adoption of both of those technologies and are those helping you to gain share? Just how is that impacting growth?.

Yes. So inflow tracking, as we've talked about, I think in Barcelona, is still kind of relegated to the very top tier. We are hearing more discussions with wider range of platform providers that'll be taking it down in the mid-tier. But that's going to take some time. It's really kind of a next year activity. So inflow tracking is important.

But I wouldn't say it's a driver right now, unless it's separate in the very top tier. The carrier aggregation is quite a bit more prominent. That is everywhere right now.

There's over 50 -- over 50 different combinations of carrier aggregation scenarios that we're now working to help enable with different band combinations and different carriers and so forth. And the thing that's common about all of them is it drives requirements for switching and filtering.

So we're very, very actively engaged with carrier aggregation work right now. I'm sure you're aware, even uplink carrier aggregation is coming next year as well for China Mobile. So that's a definite driver in the design activity in what we're specifying our products in terms of capability..

[Operator Instructions] We'll now take our next question from Blayne Curtis with Barclays..

Maybe for Bob or Eric. I'm just curious, as you look in the Junior Mobile business, you just talked about what's driving the growth. You typically -- your largest customer, you talked about 37% March. That's maybe a stronger decline than others have seen. So you saw that last year where you're then somewhere modest June.

If you can just talk about some of the moving pieces, you mentioned China up. Any additional color there would be appreciated..

Sorry, Blayne, could you clarify the number you said. We didn't understand.

I think you said 37% decline?.

Your largest customer is 37% in March, which was about a 30% decline. So maybe you saw a little bit timing-wise, a little more seasonality in March.

It just kind of, as you look into June, what are the moving pieces to get to growth?.

I think you were trying to compare us to others and again, I think we've got an extremely diversified product stream to that large customer. And some go right to the supplier that builds the phones. Some go to the sub-suppliers. So there's timing differences all the time. And our ramps up and down with any customer, it doesn't matter.

Many of them use different subs and things like that. So Blayne, I wouldn't read much too much into that, at least on that quarter. So what was the question after that? Sorry, I thought you were relating it to the June quarter..

That wasn't really the main part of the question. I was actually just asking, you are seeing some nice growth outside of that customer into June. I was just looking for what are the big moving pieces there..

It's certainly in the Mobile business, it's China. It's what we've been talking about. It's the new platform launches. We're represented more on some of the reference designs where we previously represented a little less and overall content growth, unit growth in China..

And then first, Steve, on the OpEx line, you talked about some nice synergies in terms of gross margin. From an absolute dollar amount, I guess, it seems like OpEx is down a few million into June. What's the right level to look at? I know you don't want to raise your long-term model here.

But even with some growth in the second half, you'd be above that.

When you look at the trajectory of just your absolute OpEx dollars, do you think it would grow off this space or you think you can still bring it down?.

It's again dependent on the book of business we have. We're fundamentally going to drive for a full year 20% operating expense. And if revenue is not as good as we think we'll cut more. If it's better, we'll invest more. So I don't think you should look at a lot of growth. We'll be managing it carefully.

But it will be dictated by the level of revenue that we're able to achieve..

We'll take our next question from Edward Snyder with Charter Equity Research..

A couple of questions. Eric, could you see content gains based on the technology from both companies in the second half of this year? Or there was a 3 way -- there was a couple of 3 way in the A side last year.

So given the timing of phone ramps, would those be brought to bear anytime in the calendar year here? And then on your DRX modules, they all have LNAs in them or you're also going to do passive devices like we've seen in the past where you just filters and switches on a module? And then, Bob, in the bigger picture, I'm sure you saw a lot of the action on the stock in the last couple of quarters, but especially the last quarter.

There've been a lot of, though, concerns about declines in China, et cetera. Holistically, where do you think the bearish case on Qorvo is the most incorrect? I mean, a lot of you are still wondering about China, 2G, 3G, slowing down there. They're worried about maximizing content at some of the major OEMs.

So if you just speak to where you think most people might have missed it on the downside of that, I'd appreciate it..

I think Ed I'll take that first, Eric can take a little bit of time to answer Ed's 2 other questions. I think, Ed, people are struggling with understanding that the RF market is growing, just high-level macro. I mean, if base bands go down, everybody thinks we're going to go down.

But what they miss is, their base bands might be going down but they're shifting to 4G which needs more RF. So at a high level, it's still an extremely healthy market. I think the second area is, we sell a lot of parts quite honestly. Some of these filters are small as a grain of rice. And they're hard to find.

When you look at some of our little switches and they're not identified, and you kind of go through this and people do teardowns and some of these phones we look at after they do their teardowns because we know we're in them, we don't look for it. And in fact, in many of these places, they're strengths of ours.

We'll find 30% to 40% was not even identified in the teardown. So I think again, people have to first get their head around the complexity of what's in a 4G phone of not only integrated components. Even in highly integrated phones, there's a lot of discrete still out there. And we enjoy a lot of that business, Ed.

So again, RF is a great place to be right now and we're enjoying it and we have the right products..

And I would throw in there, and it's a similar comment. I think our success in China has been underestimated. I think that, that's a diverse set of customers. It isn't quite as prone to the major event teardown, kind of press event. But going back to the pre-merger, both companies have had real success there. The units of 4G are growing like wildfire.

And I just don't think the market fully understood both the volume increases and our success rate at that diverse set of customers..

To that point, Steve, what is -- I mean RF Micro in the previous closure before the merger, we're kind of flattish in China and you grow through really well in, 4G and partly, because you had a big exposure to 3G and 2G nodes were declining.

How -- where does that shake out this quarter? Do you still have a significant revenue in 2G, 3G or is it de minimis? And is China still flattish for you in this period? Or -- have you turned the corner and that 4G is just starting to show up as a big driver there even in that segment?.

Well, I think, Eric, now he has 3 questions for you to answer..

I pointed that to Steve so I'd give Eric a break..

Thanks for the try. So yes, I mean 2G is certainly de minimis in our business and the 3G entry for the most part is as well. Again, it's hard to break out. Because a lot of that 3G stuff is in the 4G handsets as well and a lot of our components are used in both modes. So it is a little hard to break it out.

But to your point, there's no question right now that the 2G, 3G headwinds are lighter than they were the past couple of quarters for us. And we're getting -- starting to see more of the full content growth from 4G. So if I could move back to the first couple of questions. The content gain, second half, yes.

So the product development cycle, as you know, are generally about 9 to 18 months and then with design-ins and ramp-ups, you're not looking at major impacts from new content gains from the merger this fiscal year. It's really next fiscal year when you're going to begin to see a full portfolio of Qorvo products.

The diversity received module, which you mentioned specifically, is 1 example where we are, I think, able to capture some of the content gains from the Qorvo merger during this fiscal year. And to answer your specific question, about LNAs, as far as I know, at least I believe, everyone that we're developing will have LNA capability in it.

And the reason for that is, we're really attacking the premium diversity received module market. So we're not going after the kind of just diversity received modules that have been the phones in the past.

We're going after the ones that are in the high band count, high carrier aggregation requirements, types of applications where, one, you need really good filters and really good switches; and then also, two, you do need LNA, you need some active components in there. That makes it a very attractive segment for us..

But doesn't that then suggest that competition for those parts, all the traditional competition, which is a lot of the Japanese firms are doing in the past is starting, is declining because they don't have a very strong, active offering. Or is it that bunch of people plus you and Skyworks and some new ones.

Is it more competitive or less competitive? And are you seeing the Japanese increasingly aggressive in the amplifier side of it now?.

No. Like I said, it's a target-rich environment. We're picking the ones where we think we have the most differentiation. So yes, we're going after segments where we think we have something really unique by definition. That means the competition shouldn't be as strong at it.

And again, it's really just finding the intersection of where we have those differentiated strengths where there's also a problem our customer really, really needs to solve. And that's exactly the case in these diversity received modules..

And final question for James. So you saw with one of your major competitors a very big increase in their non-mobile business, but specifically around Wi-Fi. Especially now that we're going to 2 by 2, 3 by 3 and I think even Broadcom's got a 6 by 6 design out there, as a reference now.

Are you seeing as much of an uptick? Is it an area that you're starting to focus, as to mention, Wi-Fi here. And again, in the CPE side, seems to be what's driving a lot of the growth these days.

So 2 questions, one, are you seeing a similar trend in your end demand? And two, how do you feel your position on the reference design? Because a lot of it is reference design at both, say, Broadcom and Atheros or any of the other vendors that you could talk to. Thanks..

So I would say, Ed, again, thanks for the question, we're on the verge of that. We've got some of our first key reference design wins in that area and were starting to ramp up production on those products now. So I think as we do get to the back half, we'll start to see substantial growth in that area. Certainly, that's where we're focused.

We're really focused on supporting those reference designs and make sure that we have discriminating technology. So I think we'll start to see more and more ramp up in the back half, and it is a big focus area for us..

So and final question. The -- I guess it's probably to Eric. So you -- correct me if I'm wrong, but you've enjoyed a tighter relationship with Qualcomm probably in the last 6 months or so, evolving relationship than you have in a long time prior to that.

Is that starting to bear fruit in the reference designs? Do you see more traction in their general products? Or is it almost specifically focused on, I thought you would've use RF 360, how is the Qualcomm relationship evolving?.

Yes, you're right. We've actually managed to have a good relationship with them. They still depend on us as well as other RF suppliers for the vast majority of their RF content on their reference designs and the products that they ship. So I think it really does scale with the overall opportunity.

And it's not just Qualcomm specific but with each of the reference design houses. We have an increasing amount of attention these days and therefore, content that's coming along with it..

We'll take our next question from Tom Diffely with D. A. Davidson..

Just a quick question on the filter side.

Are you starting to see a blur in the lines between the TC-SAW and the BAW filters these days? And which of the 2 [indiscernible] the biggest incremental opportunity for you on a near-term basis?.

This is Eric. I don't think there's really a blur in the line necessarily. I mean, there are more and more frequency bands coming on. And even with the existing bands, there are changes that are coming from the operators. We still work very closely with the carriers and helping to sort of influence the requirements for the filters.

And there are some that are very well-addressed by temp-comp SAW, and some that are addressed by BAW and temp-comp BAW even. And we see in general, the ones that are going to be addressed by BAW are growing more rapidly. And those are the areas that we're primarily focused on..

Okay, so you're not seeing the TC-SAWs and migrate over into where BAW filters historically have been strongest?.

No. In fact, we see several cases where BAW is taking what is more traditional SAW content. TC-SAW applies to a few bands areas specifically and very, very well. We don't see that changing. The overall trend is kind of between SAW and BAW.

And the diversity received modules we've talked about several times today are an example of were able to take what's SAW before and replace that with BAW and actually add value to the customer..

Hey, Tom, it's Steve Buhaly here. Sometimes when you look out there, you see people talking about -- I've seen TC-SAWs encroaching and moving up to higher frequencies and all that stuff. Typically, the source of those are people who only have access to TC-SAW filter technology. And Qorvo, as you know, produces both those.

We're a neutral party and will deliver the technology that serves the customer [indiscernible] best..

That concludes today's question-and-answer session. At this time, I will turn the conference back to management for any additional or closing remarks..

We thank you for joining us today for Qorvo's Fourth Quarter Earnings Call. Qorvo's a primary beneficiary of the exploding demand for mobile data and the increasing RF content in connected devices. We're outpacing our markets and expect to deliver strong operating leverage as we implement our integration plan and capture merger synergies.

Thanks again and good night..

That concludes today's presentation. Thank you for your participation..