Skyworks Solutions, Inc. (SWKS) Earnings Call Transcript & Summary

All right. Welcome back, everybody. A real pleasure to have Kris from Skyworks and also Mitch, who's joining us. I'm sure everybody knows Kris and -- Kris, I can't -- okay, I can see you stuttered for a moment. I just wanted to make sure we were a bang on the technology. I've been having some issues on my end. So welcome, thanks, too. We're continuing with our sessions for today on the semiconductor side. Kris and Mitch, great to have you join us.

Maybe before we get into the thick of things, if you could just get started with the near term, just remind us what you said about the current quarter and how has this business progressed so far.

Sure. And Ambrish, thanks for hosting this Virtual BMO Technology Conference here. I hope one day we'll get back to meetings in-person. But for now, we do it virtually, supported by all the great technology that we have around us here. And so first of all, I mean, despite the ongoing pandemic and the coronavirus issues that are still around there, we at Skyworks, we take it very seriously, and we do everything to try to stop the spread while at the same time, of course, continue to deliver the essential service that we do. This is actually a very great time for a company like Skyworks, which is a true technology leader, right? And we have a very strong position that we've built up over the last 20 years as we transitioned from 2G to 3G, from 3G to 4G and now finally, taking the next wave transitioning from 4G to 5G. And you have seen some of our customers have launched their first 5G phones, Samsung, our Chinese customers. There has been very strong demand for those 5G phones. And our large customer is getting very close here to launch their 5G phones here. So we are very well positioned there, strong demand, big step-up in content, potentially could see some benefit there from a unit point of view. And that's in our mobile business. Of course, in addition to that, we have our broad market business where we see a lot of strength supporting work-from-home as well as a transitioning going on from WiFi 5 to WiFi 6 and 6E. And so when you put it all together, we provided some very strong guidance for the September quarter, up mid-teens from a sequential point of view. And then, of course, taking into account a somewhat delayed ramp of the 5G phones at our customers, we continue to see that strength going into the December quarter as well.

I'm surprised you said at some point, you'd like to see us go away from a virtual world given your portfolio of your products. I would assume that you would want to be in a virtual world with a little bit bandwidth and connectivity but obviously, nobody wants the pandemic to keep going.

Exactly.

Just sticking with the near term, Huawei. Now Huawei has essentially been derisked from your numbers from a couple of quarters. But I just wanted to see if the latest ruling that was passed out had any impact whatsoever on your business.

Yes. It will, right? So Huawei used to be a very strong customer for Skyworks back in 2017, '18 and the first half of 2019. At its peak, it was $125 million per quarter, roughly $100 million in mobile and $25 million in the infrastructure business. And then, of course, the ban was introduced back in May 2019, the first entity listing. And so unfortunately, that was painful. Revenue declined and was as low as $10 million in the December quarter of 2019. Since then, the business has bounced back a little bit. And so it's now somewhat in the mid-30s of million dollar per quarter. But then last week, we got the new export restrictions. And as you probably know, no semiconductor company in the world will continue to be able to supply to Huawei as long as they depend somehow in their design or supply chain on U.S. technology, but every semiconductor company depends somehow on U.S. technology. And so there is somewhat of a grace period, so we can continue to ship until end of day, September 14. So it will have very minimal impact on our September guide or September number. But then in the following quarters, revenue is expected to go to 0. Again, we've derisked that in our financial forecast. We kept a very minimal low level of revenue for Huawei. We could potentially lose that. But having said that, of course, the global demand for smartphones is not going to change if Huawei is able to deliver or not deliver. It's going to remain the same. And so somebody will have to supply that. If Huawei cannot supply that, Oppo, Vivo, Xiaomi or Samsung or Cupertino could potentially supply that.

Okay. And thanks for that color. We've been asking this question of everybody since we've been doing the call. So I didn't realize there was a grace period up until September 14. So that's helpful. Kris, I wanted to zoom back and zoom back up. I wanted to get the view from a CFO before we get into more of the business. So I wanted to -- you've been at the company for about 4 years now, and you came with a ton of operational experience. That was -- if I remember meeting you for the first time, we sat down, we talked about what you are bringing to the company. So how do you think about managing the business? So a, and where are you looking to have -- where have you had the biggest impact? And where are you looking to have the biggest impact, whether it's managing assets? And then I also wanted to throw in capital allocation, your and my favorite subject. How do you weave that into your framework of how you're managing the business?

Yes. It has been a great 4 years here at Skyworks. It's such a great company. We have a great team that we have here. And I have -- before I came to Skyworks, I have been some great semiconductor experience in other companies, some of them fabless, some of them that own their own fabs. But one of the things that really strike me the most here at Skyworks is the level of complexity of our operational footprint and supply chain. We're not a classic semiconductor company, which, in my mind, you design a product, you make the wafers fabless or fab, you cut them in dies, you assemble, package them, test them and ship them. We do a lot more here. The level of complexity with the gallium arsenide fabs that we have, our filter operation, which is 2 fabs in Japan and 1 in Singapore, then we buy a lot of third-party materials, SOI, printed circuit board, passive components, and all of that gets then integrated in a very complex but integrated module with very complex back end assembly, packaging technology as well as RF testing. And so that is a lot more complex, requires a lot of attention. The nice thing about that for Skyworks is that we're really good at that and at the size and scale that we do it. And I don't look at it as a negative. It's actually a positive for us. It's one of our strengths that we have. It's one of our major competitive advantages that we have. But it definitely requires a lot of attention from a CFO and from the whole management team.

Okay. Capital allocation, this obviously -- you have an analog-like business model and you churn out a ton of free cash and you raised divi kind of, if I remember correctly, about 1.5 years, 2 years ago. So now within the capital allocation, walk us through the priorities. And then how does M&A figure into that? And then longer term, how do you think about the capital structure for Skyworks?

Yes. Yes. First of all, we are a highly profitable company, right? And we generate a lot of cash. On an LTM basis, our free cash flow margin was 32%. Despite the fact that, of course, we continue to invest in the future of the company. We spent roughly 10% to revenue in R&D, advancing the technology road map, advancing our product and solutions road map that we have. In addition to that, we spend on or about 10%, 10-plus percent of revenue on CapEx. Again, in part driven in the expansion of our capacity needs as well as new technology and expanding our reach from a technology point of view, including the investments we make in our BAW filter operation. So despite all of that, still generating a lot of cash every year. Most of that cash is being returned back to the shareholder, a combination of our dividend program and a share buyback program. The dividend program, we just, couple weeks ago, increased the dividend 14%. It's now $0.50 per quarter per share, which is now yielding on or about 150. And so there is still further room for improvement there as well as continue to be active from a share buyback point of view. And even at current prices, we continue to be active. We don't feel we're fully valued. This is just a start of this 5G wave, big wave, big talent. And so there's a lot of further upside there. And so we continue to be active from that point of view. And so we've -- but we returned most of the free cash flow back to the shareholder with those 2 programs, that still leaves us more than $1 billion of cash on the balance sheet with no debt. And so that leaves us a lot of opportunity to be active from an M&A point of view. And so we have an active process in the company. We look at small, medium, large targets, potentially strengthen our position in that mobile ecosystem as well as filling some technology gaps and potentially becoming a more diversified company. And so that's the strategic rationale that we're looking at. At the same time, of course, we're not going to do anything stupid. We remain disciplined. We want to see, from a financial point of view, a clear return on investment and that's sometimes a difficult part, given some of the valuation of some of the targets out there and you add a premium on top of that. It's hard to see where the return on investment is coming from. But if there are opportunities out there, we will definitely participate.

Yes. And so Avnera was part of that, the diversified analog acquisition. And so we should think that the infrastructure business should be a focus for M&A or -- because in mobile, now with BAW, you have seem to have all the pieces of the puzzle. So is that how we should be thinking about it, most of M&A attention is going to be on the diversified side?

No. I think, for us, it's a combination of BAW. And BAW opportunities, we will look at it. I mean we like the mobile ecosystem. It's a great ecosystem. And again, like 5G is going through that ecosystem, a big tailwind. We can definitely further strengthen our position there. And so if there are opportunity there, we definitely want to play into that. In addition, I mean, we do understand that becoming a more diversified company can create a lot of value. We're doing that in part organically with our broad markets business, which have thousands and thousands of customers, which is a business that's running at above-average gross margin, above-average operating margin. And if we can accelerate that, that's definitely a place where we can, as I say, like, create additional value.

Yes. Yes. Okay. And I wanted to stay with the operating model. One thing that has appealed to me, and I was only saying how just when we started the call, I said, where is my other analog CFO? This is an analog-like business model, a ton of free cash flow, 32%. You said, 32% LTM in what was a pretty difficult backdrop for mobile in the last year, 1.5 years. This is at the upper tier, the upper quartile of what semi companies do. And this is also despite a pretty strong customer concentration. Your free cash flow has always been very strong, which has kind of differentiated you from Corvil. But even Corvil has turned it around on that front. So to me, that speaks to the structural changes also to some extent that are going on in the RF side, whether it's just on mobile or beyond mobile. So the question is really two part. Number one is, how has the ecosystem evolved, especially with the increased complexity not just in 5G, whether it's WiFi 6 and other areas and then how does that sustain the free cash flow generation? That's one. The second, I would be remiss if I didn't talk about competition and I didn't talk about Qualcomm. So if you look back, Kris, to over a decade, there were so many other participants, and now we have quite a few. But Qualcomm has a lot of firepower that it can bring to front. So again, question number one, how has the ecosystem evolved? And how does it continue to evolve to sustain that free cash flow generating model that you guys have had for a while? And the second is when you put that competitive dynamics also, how is that changing your business?

Yes. And the ecosystem has evolved a lot over the last 20 years and actually has become a lot stronger, right? I mean think back 20 years ago or more when 2G came out, right? RF, there were more than 10 players. It was a commodity. It was relatively easy to do. And the gross margins were in the 20%. And I guess the cash flow was not that great, right? But as we then moved to 3G and then to 4G and now moving to 5G, level of complexity is increasing the demand for integrated solutions at higher data speeds, lower latency, too really complex and hard to do. It just like you need all the right technology building blocks from gallium arsenide, PAs to the different flavors of filtering. You need access to the third party. You need to be able to integrate all of that. It's really hard to do that especially at the size and scale that we do, also taking into account the seasonal fluctuations that we go through and doing that for one of the most demanding customers on the planet, right? So as we go through those transitions, you've seen the gross margins improving from 20% to 30% to 40%, now getting into the 50%. And at the same time, of course, there is a lot of reuse and leverage of the IP. That's why our R&D is running on or about 10%. And compared to some of the analog players out there, that's relatively low. But again, there is a lot of reuse and leveraging their IP. And we are really efficient in deploying our R&D dollars, expanding our reach, but at the same time, kind of reusing those building blocks. And yes, we need to invest in CapEx because, unfortunately, there is no foundry model, right? There is no foundry model. There is no gallium arsenide foundry or there's no filter foundry. Even some of the complex assembly and test we do, it doesn't exist in a foundry model. And so that's why we make those investments ourselves. Despite all of that, we continue to drive very strong free cash flow. The other thing, what we've seen is that while the level of complexity is increasing, the number of players that can do it has been decreased, right? The number of players that can do that hard, complex stuff at the size and scale we do is very limited. And yes, I mean, an attractive ecosystem will always potentially attract new entrants, but it's really hard to get into this business given the level of complexity, given the seasonal fluctuations, given the size and scale that we are at. And we pay a lot of attention to our competitors out there. Their success and failure. But again, if you're not being a true leader through those transitions, and if we haven't been a technology leader in 4G, it's hard to see how you can become a technology leader in 5G, where it's so much harder to do.

Yes. Okay. That's helpful perspective, especially on the ecosystem side. Just to stick with the operating model, it's -- gross margin, 50%, it's kind of where you are at the right level to be thinking about longer term, or -- and I think longer term, you have set 53%, right? What are the levers that you need to be pulling to get to that level? And are we -- a lot of us get too focused on gross margin. But when you, from your perspective, and you look at it and say, "Guys, look at the operating profitability and the free cash flow, that's what you should be looking at." So is there a number that -- is gross margin number you are fixated on? Or you're saying 50% and slightly higher than that is the right model of the business longer term?

Yes. I mean we obviously are focused on driving the top line and growing the company, making sure we have the right technology building blocks to support that. But yes, profitability, depending on how you measure it, is very important, from gross margin, operating margin or EBITDA margin, which is getting close to the 45% EBITDA margin as well as the free cash flow margin, as you pointed out. In terms of gross margin, our target is 53%. We have been making some good progress. But of course, we had some setbacks as well with the Huawei headwinds and some of the COVID-19 headwinds as well as some overall macroeconomic headwinds. Having said that, we are confident that we can continue to make some steady progress towards that 53%, and there's 3 main blocks that will get us there. The first one, probably the most important one, is bringing higher value-add products to our customers. I think you've seen that 2G was 20%. 3G was 30%. 4G was 40%. 5G is 50% gross margin. It's a lot harder to do. It requires a lot of investments. Our customers understand that, right? And -- but also have to pay for the technology advancements that we bring. Second, of course, there is ongoing operational efficiencies in our own fabs that we have as well as with our third parties. And there, of course, size and scale, right? If you can grow the top line, you can see a lot of benefit and fall through on the gross margin. We have temporarily a little bit of a headwind there due to COVID-19 because of their social distancing and no overlapping shifts and extra cleaning and sanitation, some extra logistics costs as well. It's probably in the 50 to 75 basis points. It's probably going to stay there for a while. Eventually, I hope it will go away, and that will help us as well to further improve the gross margin. And then last but not least, we have a little bit of a tailwind from a mix point of view as our broad markets business, which is running at above-average gross margin, potentially will grow faster than our mobile business. Although I do believe that our mobile business will continue to grow fast as well. But as mobile -- as broad market grows faster than mobile, there is a little bit of a tailwind there as well. And so when you put it all together, there will be some steady progress towards that 53% gross margin model.

Sorry, Kris. I just wanted to make sure I understood that correct. You said broad -- the broad business will grow faster and mobile over what period?

Well it has been growing faster historically if you look backwards over the last 5 years. But even when you look forward next year, we target our broad markets business to grow double digits and so that could potentially be faster than the mobile business. But again, I do believe our mobile business has a lot of potential and could grow fast as well.

Right. Because I thought that 5G starts to really [ kickoff ] next year as it should, shouldn't the mobile business be seeing a...

Yes. That is true. And so that will be a big tailwind in the mobile business. Now we also believe that -- and it's probably a little bit later in time that you will see the adoption of 5G outside of a handset, right? And you will see a lot of adoption of 5G, even in the connected home, 5G in the connected car, 5G in the connected factory with stand-alone 5G networks that will power your wireless factories. And so it's probably a little bit later, right? First, 5G will happen in the phone, but it has big potential outside of the phone as well, and we're very well positioned here to capture that.

Okay. I just wanted to make sure we weren't walking away with that mobile would not have a strong growth next year. But all you're saying is over the long term, broad-based has a lot of drivers as well.

That's correct. That's correct.

Okay. Got it. Got it. Thank you for the clarification. Let me come back to 5G. For the last couple of quarters, at least my takeaway was -- has been that you tend to be a pretty conservative management team, both you and Liam don't really go out and give us a lot of color unless you have some recent experience, unless you have something really good to talk about. My takeaway over the last couple of quarters has been that the messaging, whether inadvertently or you wanted to give that to us, that you sounded really confident about what you have in 5G. And I think some of that has shown up in -- it seems to be pretty good traction as the Chinese big -- what are they, Big 4, excluding Huawei, as they are ramping into 5G. But it sounded like even at the -- at one of your larger customers, you seem to have a pretty good positioning. So the question is -- and I guess the market is taking that for granted now, so the question is what gives you the confidence that, that piece that you have carved out yourself -- for yourself continues as 5G evolves as we get into the next layer of 5G? So what are some of the pieces that will now come to the fore beyond the first phase where you've seen pretty good traction in China? And then it sounds like with the upcoming phone, you have a pretty good position as well.

Yes. No, it's something that, again, we have been working on for many, many, many years, right? And it's really hard and complex to do 5G being layered on top of 2G, 3G, 4G and drives actually a lot of stress on the legacy parts, which become a lot more complex, more filtering, higher ASPs. And then, of course, you have some additional hardware to support the initial 5G bands that are being added. And the way I think about 5G is very similar like what we have seen in 4G, where initially you had 4G LTE, over time, it became 4G LTE Advanced and then 4G LTE Advanced Pro. You will see similar evolution in 5G. This is just the first wave of 5G with a limited number of bands that's being added, some re-farming of the existing bands as well. But over time, more and more bands were being added, more and more complex MIMO were being added on the transmit side and on the receive side. And so this is just the beginning. And -- but so far, it has been great, right? The Chinese adoption has been very strong. 6 out of 10 phones being purchased nowadays in China are 5G phones. The large customer hasn't launched yet, but we have secured our design wins in that platform. We are not allowed to talk too much about that. And so that's why we can't wait for those phones to come out. And then you guys can see in the teardowns all the great Skyworks content inside the phone. But again, this is just first year of 5G phone, there will be a lot more improvements being made, pushing the performance curve. We are actively working on that with all our customers. And so there is still a lot more to come there.

Okay. Okay. That's helpful. And if we could, a couple of questions on the 5G. Number one, I don't think you've given a TAM for this year. Correct me if I'm wrong whether you have given a TAM of 5G units for this year. And second, on China, we talked about it a little bit. Can you just walk us through the opportunity in China as it relates to TAM or the content per phone from -- as those guys go from discrete to modules. Because we think at the high end, you talked about '18 going to '25, but what about the China market? And how much of that you think gets penetrated? Let's assume this year, there's, I don't know, 200 million units that come out.

Yes. I mean we -- as you pointed out, right, we're maybe a conservative management team and don't like to kind of inflate the numbers. But when you -- and we all read the same analyst reports, right? I mean if you look at 5G units for 2020, I've seen -- if I look back 6 months ago, I've seen numbers as low as 150 million and as high as 300 million. 300 million seemed a little high. But I mean, what we have been saying, it's probably 200-plus million, 200 million units, on or about, right, which is a great number just for the first year. Potentially doubling next year in 2021 to 400 million, maybe 500 million units. And then doubling again in 2022 to 800 million to 1 billion units. So you have 2 years in a row here where you go from 0, you get to 200 million, you double and you double. Eventually, I mean, there's 5 billion, 6 billion phones out there. They all need to be replaced and they all will become 5G. So that's the big opportunity for us. And yes, there is a big step-up in content. Of course, it's different if you look at it, what type of phone you look at. In some of the flagship phones, there was already a lot of RF in a 4G phone. Skyworks, in some cases, go up to $10 of content. And of course, now with 5G, you will see a big step, a bigger-than-normal step of increased content. It's different in the mass tier, especially in China mass tier phones where in late-stage 4G, we only get $1 or $2 or $3 of Skyworks content with a bunch of discretes being wrapped around that in 4G. Now that we move into 5G, it's game over for those discrete architectures. They can no longer do it. They ran out of board space, they can't get to the performance and power consumption levels that they need. And so now they're all switching those 5G phones to fully integrated architectures. As a result of that, Skyworks' content now is $6, $7 or $8 in a mass tier 5G phone. And so again, multiply that by whatever, 100 million out of 200 million in the first year and then double that and double that in the years after. And so that's a big part of the content growth story.

Just on the content growth. What is the typical price declines you see on a -- and I know it's a little bit harder because you're adding more content and different functionality, but what's the right way for investors to think about the price compression as you go through on a year-over-year basis?

Yes. So the way I look at that is sometimes I compare a new phone, one phone that came out compared to the phone a year ago. And typically, what you see in the new phone is increased RF, right? And you will find the similar type of sockets. You will find a low-band path and mid-high-band path in a DRx or multiple DRx sockets and a WiFi socket. But typically, every year, those sockets become higher ASP sockets because the performance is better, the integration is higher, the die size got shrinked and so it's harder to make it. And so every year, you see an increase in 1 new phone compared to the old phone. Of course, we continue to sell parts into the legacy phones that have a 2-, 3-, 4-year life and you see some ASP erosion what you typically find in the analog space on the legacy parts.

Yes. Okay -- which is analog space is like low single-digit kind of numbers as at least what it used to be.

Yes. Low- to mid-single digits. Yes.

Okay. Okay. That's helpful. We haven't talked about the broad-based business, the diversified business. Can you spend a few minutes on the segment? It's now -- it's a fairly big part of Skyworks, and it's also very profitable. And it seems to be there are some real growth drivers there. One of the ones is obviously WiFi 6, along with 5G. So how does the -- if you could just break out the business, what are the main components of the business? And then how should we think about the drivers as we look over the next couple of years, 2, 3 years?

Yes. So our mobile is roughly 70% of the total revenue. Broad markets is roughly 30% of total revenue, that means it's running at the $1 billion annualized revenue. And so I think there's a lot of semiconductor companies out there who are trying hard to get to $1 billion, right? We have our broad markets business, which is $1 billion in annual revenue, as I said before, at above-average gross margins, above-average operating margin. And that business, roughly 75% is IoT and 25% is infrastructure. The infrastructure business, we had a little bit of a setback with losing $25 million per quarter or $100 million on the Huawei business, but that's now down to 0. The infrastructure business itself has many years of a tailwind as 5G infrastructure will be built out. We have a very strong relationship with the key players there, Nokia, Ericsson, Samsung. We still have some business with ZTE left there as well. And so we're very well positioned to benefit from many years of 5G infrastructure network build out. So that's 25% of our broad markets business. The other 75% is IoT, where we play with mostly WiFi, but -- and it could be any wireless connectivity protocol, WiFi, Zigbee, Bluetooth, LoRa, GPS, which is a big part as well as what we see more and more adoption of cellular in IoT space, bringing 4G and in the future, 5G outside of the mobile into those IoT devices. And so I think we're very well positioned there. Within IoT, I look at 4 different segments. The biggest one today is what I call the connected home, right, which is really benefiting from the work-from-home or play-from-home or learn-from-home or shop-from-home or whatever we do nowadays from home, right? And so the router business, the WiFi mesh networking, laptops, tablets, security networking, ring doorbells, you name it, a lot of cool stuff, a lot of devices that show up in your house and my house that all have very powerful wireless connectivity inside. The second group there, is smaller today but a lot of design-win momentum, is the connected car, where we play with all the main car manufacturers as well as the Tier 1 OEMs. And initially, it was putting WiFi and Bluetooth in the car, then 4G was added and in the future, it will be 5G. And for me, the connected car eventually becomes an autonomous driving car, right, which could have more than $50 of RF content to support full autonomous driving inside the car. Then the third segment is more the industrial segment, where you see a lot of momentum with factory automation, right? If you're going to build a new factory, you're going to put in a stand-alone 5G network that will connect all your equipment and tools in your factory. And we work there with all the key players like a Bosch or a Siemens in that area. And then last but not least, you have some of the consumer applications from wearables to our smart audio business that we acquired a couple of years. Recently, we've seen a lot of strength there with a steep ramp of revenue in September and December here, in part driven by the play-from-home with gaming headsets, strong momentum there as well. And so when you put it all together, this business should be growing double-digit year-over-year.

Okay. That's very helpful color. I'm going to pause here and see if there are any questions from the line. So let me just, again, folks, you know the drill. Fire away if you have any questions. I'll just pause a little bit. Okay. One question on CapEx and capital intensity. Now that the BAW factories have been built, what's sort of the right way to think about capital intensity for the company?

Yes. The CapEx will remain on or about 10%, 10-plus percent to revenue because in BAW, we've made the initial investments, right? And so as you know, we've been ramping from 0 up to 150 million integrated devices that have 1 or more BAW filters inside in a very short period of time. But this is a multi-multibillion-dollar market, right, where you will find integrated devices with BAW filters inside in multiple parts of the phone as well as outside of the phone. Of course, there is the mid-high band path on transmit side, there's multiple sockets on the receive side, there's the antennaplexers, you have WiFi parts that will have BAW filters inside. And it is just like you will find even infrastructure devices that will have BAW filters inside. So it's a huge market, and we've only started. We run an exponential growth there, and we see a lot of positive momentum, design wins that are now transferring into revenue. And we will have to continue to further expand that BAW production line as we have more momentum and grow that business exponentially here. In addition to that, a lot of the CapEx is really driven by the technology, right? It's -- we do a lot of complex advanced packaging that requires dedicated equipment. We do RF testing, which is getting a lot harder to do at higher frequencies. And so all of that is technology-driven CapEx. And I can see here for the next couple of years, our CapEx, in support of the technology road map and in support of the revenue growth, on or about 10% to revenue.

So is it fair to assume that the incremental CapEx is being directed towards the BAW side?

It is a BAW filter, but we continue to invest on TC-SAW filters as well and also the back end operation.

Okay. Okay. There is a question from the line. And you addressed it a little bit earlier on, but -- so it's a 2-part question. One is, what is your market share in the handset market? And then second one is coming back to competitive. Are you concerned about Qualcomm entering the space? Why or why not?

We take all our competitors very serious, right? And so we study their technology road maps and product road maps and their success or failure in the marketplace. And so yes, we definitely pay attention to what Qualcomm is doing, in addition, of course, to Avago-Broadcom or Qorvo or Murata, which are the key players in our industry there. And so -- I mean, each of those players have a little bit their own strength in that ecosystem. Like if we look at Skyworks, we are very strong on the low-band path on the transmit side. We are very strong on the receive side, very strong GPS, WiFi and then some other parts. And then we don't bump into Qualcomm too much in those areas. I think Qualcomm is more focusing on millimeter wave, right, as well as the envelope tracking, which is integrated into the base brand. They have some legacy filter business and so we don't run too much into each other for now. But again, we take them serious. At the same time, we feel really good about our competitive position, our own technology road maps and the competitive advantages that we have in the markets that we place.

Okay. One more question on the BAW side. How -- and I think you might have given this at the last earnings call, is out of the total BAW shipments that you've made, how much of those are in the mobile side versus on the broad business? And then if you look at the growth, if you look at next year or the year after that, what would be the percentage of mix between mobile and the diversified business?

Now the vast, vast, vast majority is still in mobile, right? That's for sure. It's just like you will see some of the WiFi and in the future some of the infrastructure devices that will have one or more BAW filter integrated as well outside of mobile. But today and in the next 1 or 2 years, the vast majority will be in mobile.

Okay. Okay. Great. Awesome. We're coming to an end of the session. Kris, if you would like to have some closing remarks for us to take away from this conversation, please feel free to.

I think we are really excited about what's going on. As I said, despite the pandemic, right, this is a great place to be. We've made our investments. We've made the right bets. And now this big 5G wave is coming, we're taking the wave. We're well positioned from a technology point of view, with deep customer engagement. It's really hard and complex to do. We have invested in our manufacturing and supply chain. And so it's happening in China with the Chinese players. It's happening in Korea with our Korean players, and then a couple weeks here, it's going to happen and start in the U.S. as well with the launch of the 5G phones of our large customer. In addition to that, our broad markets business is looking really strong. There's a lot of secular growth trends in there that can push that business to double-digit year-over-year growth. And again, we are very well positioned and looking forward to the next couple of quarters and years here.

Okay. Awesome. Good luck. Thank you for joining us. Thank you, Mitch. Thank you, Kris. Take care and always a pleasure having you on and look forward to talking to you soon. Take care. Thanks, guys.

Thanks, Ambrish. Bye now.

Bye.