I understand there are sensitivities about, you know, additional details here. Phil, but you sound definitely much more confident than, you know, three months ago. So I'm just trying to understand what changed in the past couple of months that's giving you this confidence. You did talk about, you know, phase three being completed. I guess, you know, just to give us some pointers as to what are the next steps and how many more phases, if any, are there in terms of this AMER, you know, approvals. Any additional color, I think, would be really helpful.

Yeah, thanks. I think, as everyone knows, the regulatory process is, you know, inherently uncertain, right? So you're not really kind of going through that. But we have, you know, we continue to move forward. The phase three of SAMR is, in fact, the final stage of that process, and we are working actively and constructively with the two, you know, remaining jurisdictions. And I think that, you know, based on the discussions we're having with them and based on the progress with SAMR leads us to believe in an increased closing as possible and frankly we're preparing to close as early as this fiscal year.

Thank you. Our next question in queue coming from the line of Tom O'Malley with Barclays. Your line is now open.

Hey guys this is Kyle Blustein on for Tom O'Malley. Thank you for taking our question. So in mobile June and September both coming in seasonally just when I think of long term about the industry given all the what's going on with memory and the different employees and customer build plans. Is there anything that you can kind of comment on long-term, if anything's changing your view on either build plans or normal seasonality?

No, this is so bright. I don't think there's anything. I mean, we just guide one quarter at a time and I think the memory topic has been one that's been coming to the forefront of investors' mind, probably starting in CES of this year and we've just been kind of keeping a close eye on it. We've been trying to guide one quarter in advance And I think, you know, some of our customers are, you know, if you look at certainly our largest customer, I think they've been doing ahead of some of the, you know, some of the, you know, projections from that side. So, you know, we're guiding to the best of our ability like we've done in the past couple quarters. And that's keeping a close eye on inventory and the customers and just watching it as often as we can.

Yeah, and just to add to that, I guess, as we look at kind of sequentially, mobile's up high teens, our largest customer's growing well above the blended rate on the seasonal ramp. We do see that partially offset by our Android customer, which was very strong in Q3. But to Phil's point, our demand signal seems steady. Our book-to-bill is above one. Inventory in the channel remains lean. So, I mean, we're keeping a close eye, but we don't see anything at this point that would change our kind of go-forward consensus rate.

Thank you. That's helpful. And just for a follow-up, you talked about adding more AI uplink into the phone. In the past, you guys have talked about AI being more on-device and needing more complex RF signals and shrinking some of the parts. So when I just think about the combination of that or in whichever shape or form it takes, can you kind of help me think about what the RF-TAM CAGR could grow or the content CAGR could grow over the next couple of years?

Yeah, I think the way that we're trying to think about it, But I'd say that our ability to monetize that is going to be our ability to deliver the parts and price them competitively doing all the like. But what we do see, and when I talk about that is when we look out in time, what we see, and we have some visibility in the industry out many years, as you might imagine, what we see is increased RF content over time. How that actually plays out in terms of ASP and content and all the like is still a chapter in the book to be written. But what's in the rearview mirror is content shrinking over time. What's in the headlights and in the windshield now is RF content growing. And I think we see that as a change from what's been happening in the past. And that's what we're getting excited about. And we see a lot of that change coming around, as I talked about in the prepared remarks, you know, multiple bands, satellite bands, transmit complexity. For the first time in many years, we're seeing an increase in RF complexity, which should lead to kind of increased content.

Thank you. Our next question coming from the lineup, Joseph Moore with Morgan Stanley. Your line is now open.

Great. Thank you. You just mentioned Android being strong in the quarter. Can you talk about the Android prospects in the second half? And is there, you know, what's different about that versus your biggest customer?

Yeah. So this is Phil Carter. In terms of our Android business, you know, we announced the design win last quarter. and this quarter we saw a great strength. And some of that is just the typical seasonality with our largest U.S. customer. On the flip side, in our kind of Asia Android business, we are seeing that come down this quarter as well as next quarter again, but that's being mostly offset by strength in the U.S. Android customer. So we are still seeing strength. This quarter was somewhat of an anomaly based on their own seasonal patterns, so it won't repeat next quarter. But we are seeing an offset by the rest of the mobile space and that sequential growth there.

Great, thank you. And then separately, I'm just kind of curious Chris, how are you thinking long-term about M&A? Obviously, you're going to close this deal. What's the timeframe to sort of integrate that? And do you still, is sort of diversification M&A still part of your long-term objective?

Yeah, that's a good question. Thanks for asking. Look, right now we are laser-focused on getting this deal closed, integrating it, and delivering the benefits, you know, with respect to that and proving to ourselves and to our stakeholders that we can deliver value from that. you know, I think long term when we look at capital allocation framework, we talked about the fact, you know, share repurchases, delevering, and frankly, strategic M&A, we're going to continue to work to diversify the company and bring some more stability there. And that's going to be an important part of our playbook going forward. So that's kind of our priority. Cut the deal closed, integrate, start showing the value, and then look where we go from there.

Thank you. Our next question in queue coming from the line of Edward Snyder with Charter Equity Researcher, Alanis Nelson.

Thanks a lot. I just want to check one fact. You mentioned that mobile was 57% of revenue, but then you said your largest customer was 57% of revenue, which makes sense given how large it is in September. Given that, it's down, what, 12% year over year, which was expected given all that's going on with the models and modems and shifts and all that. But I wanted to ask you, Philip, of that decline, because you're coming off a weak March also, of that decline, how should we read into that? How much of that is content shifts that we've been plagued with in the past? How much of that is maybe just a different unit build, et cetera? So I'm just trying to get my arms around how to think about a decline. And your guidance for next quarter kind of suggests more of the same. I mean, the way you've got it in mobile comes out to about $625 million. Last year in September, Apple was $737 million in the September period. And again, this is expected, but I just want to be very clear how much of this is content, how much of this is just the cadence of how it's all going to be built.

Hey, this is Phil Carter. In terms of the specifics of content and whatnot, we're not going to go into the details of specific SKUs or anything like that, but what I can say is in February when we announced initially the content loss, we were indicating 20-25% decline. Now we're looking at somewhere in the low teens. And so we are seeing some strength in units to offset that. Separately on a compare, when we look at the current quarter as well as the next quarter, if you recall from the prior year, the prior year was benefiting from a higher, richer mix of legacy SKUs that were driving up the numbers. And if you recall, we actually outperformed the high end of our revenue guidance, a lot driven by the largest customer unit sales. And so as we look at the current quarter and the next quarter, We're comparing against some tough compares in the prior year, and low teens does not seem overly significant in light of that. As you also look at the next quarter guide, there was a 14th week in the prior year. So that's roughly $80 million for the prior year quarter. That puts us roughly above in a year-over-year growth situation for our guide at about 1% when you take that into consideration.

Okay, great. And then you've mentioned it, so I want to dig into this a little bit more. We've been tracking pretty closely what the standards are doing and what people are looking at in terms of the two- or three-year roadmap for phones. AI is obviously a big topic, but it seems to be, in our opinion, a farce to believe that AI in the phone is going to be significant versus interface to the cloud. And if that turns out to be true, and you seem to be suggesting that's the case, the connectivity between the phone and the cloud is going to be significantly more important than what maybe had been previously expected. So I'm just trying to get a feel for the things that you mentioned, like more transmit diversity receive, which is a very big issue, satellite's kind of an ancillary point, but then also download. Of those areas, Skyworks has typically been very, very strong in the diversity side of the business. there was some upset about the share loss to Vago previously. But if that isn't, in fact, the case, that transmit diversity receive is going to be a big issue, and I think it is, and power, why should we expect that in the next year or so the content win is going to be at your back as we move to more, especially as a large customer tries to move to more AI in their phone?

I think it could be.

I don't think your thesis is necessarily incorrect, Ed. I think that's what we see. You know, we need to execute and deliver on that.

But I certainly, I think, I don't think you're necessarily wrong.

Thank you. Our next question in queue, coming from the line of Christopher Rowland with Cisco Hanna and Yelena Smalpin.

Hi, guys. Thanks for the question. And perhaps just adding on to an earlier question on M&A, do you guys have some sort of end market or just broad product category that you would be considering that is most desirable strategically for you guys? And perhaps if you could talk about valuations, whether you're comfortable with valuations out there as well.

Yeah, look, this is still right. Our number one goal is close this transaction as quick as we can, get started on delivering those synergies, and prove to ourselves, our customers, our stakeholders that we can deliver value from that transaction. When you zoom back out, I do think that continuing to grow and diversify our business and doing so strategically and creatively is going to be an important playbook of that. We're not sending any timeline. We're not drawing any particular guardrails around it. I think you should expect me to be a discipline allocator of capital. I've done that since I've been CEO here. this transaction should be immediately accretive and the things we'll look for, you might expect it to be gross margin accretive, operating margin accretive, EPS accretive, and those kinds of things. So we're not going to get into any specifics beyond that at this point.

And then perhaps two balance sheet or cash flow questions. CapEx was a little bit higher. I don't know if this is a new level or not and whether it's related to some of the supply constraints you talked about? And then lastly, DOI is also high. I know you have the seasonal ramp, but it's even higher than prior years. Anything to read into there?

Yeah, so this is Phil Carter. Yeah, to your point, it is mostly related to planned inventory build ahead of the September mobile ramp for our largest customer. You know, if you look at the last year, our inventory levels ran a little lower than we would have liked and provided less flexibility, and we have had some kind of stockouts and shortages that we've been dealing with, as well as having to move more towards our third-party manufacturers. And so, to your point, increasing internal capacity is definitely some of the increase in CapEx, and with that, we do have an inventory build as well. I think if you look at more of a longer average, a billion dollars is not out of the norm, especially in this period of the cycle and year. So, yeah, we are also monitoring the channel inventory, and we do see that that's relatively So as those numbers go down in the channel, we do maintain a little bit more buffer stock on our balance sheet to mitigate that risk. And we've seen more kind of mixed changes, I'd say, more recently as companies move their product lines around. So we have to have enough inventory to offset that risk as well.

Thank you. Our next question in queue, coming from the line of Kodiakry with Benchmark Stone X, Yolanda Snellfin.

Yeah, guys, thanks for taking my questions. I'm just curious, given that your prior dividend yield is at the highest end of the industry, I was just curious as to your thought process to eliminate that completely. And have you gotten any pushback from those shareholder base that relies on that dividend?

Yes, Phil Brace. Obviously, a lot of discussions went in with my board about our board about that. We spent a lot of time thinking about it. I personally spent a lot of time thinking about it, as you know, since I've been CEO. I've returned at least $800 million of capital in terms of share buybacks, plus the dividend, plus authorizing Corvo to buy back $400 million in our own stock. I think you've seen me to be a very disciplined allocator of capital. When I looked for the strategic framework in terms of the combined company going forward, and I looked for the best opportunities to deliver value for the shareholder, it was done in conjunction with the board. A lot of analysis went into the discussion. and we determined that we would allocate that capital towards both share repurchases, delivering the balance sheet, and strategic opportunistic M&A to help continue to diversify the businesses. And that's how we looked about that. It was just kind of a framework that we're using to deliver value to shareholders, and we think this is a much more creative way to do it.

All right, thanks. And then lastly, just any puts and takes into your gross margin assumptions. quarter to quarter, knowing that you've got some of your higher input costs, but it does sound like you've got some price increases and utilization rates should be trending higher, some positive offsets as well.

Yeah, this is Phil Carter. Yeah, I would agree with that. We do have some positive offsets. Every year, we set out to reduce costs, increase efficiency, and every ramp cycle, you know, we look to reduce costs, right? We set our prices essentially at the beginning of the year, and then we go into a new ramp where we have to ramp new technologies, new products, and we look to get efficiencies to bring up our gross margin. As we look right now, the input costs have been going up faster than we're able to save on other areas. In terms of mix, looking quarter to quarter, if that's what you're looking at, we do see a higher mix of mobile and Q4 where it's 61% of revenue versus 57%. But, yeah, I think we're always looking to have more cost savings. The other 40% of our business, broad markets, where we have more opportunity to increase prices, There have been some price increases already, and we are looking at other areas where we could take action and selectively increase those prices as well to pass on the cost that we're incurring on the other side. But, yeah, longer term, just, you know, we are sticking with our 50% to 55% combined company longer term, and we're really focused on that as a combined organization, how we can achieve these cost synergies as a combined org.

Thank you. And that concludes today's question and answer session. I'll now turn the call back over to Mr. Philbrace for any closing comments.

Great. Thank you. Thank you for everyone attending the call. I look forward to seeing you in the coming quarter at the conferences and out there in the market. So, thank you very much.

Thanks, gentlemen. This concludes this conference call. We thank you for your participation. You may now disconnect.