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

Well, good morning, everyone. I'm Chris Caso, Semiconductor Analyst at Raymond James. Welcome to our Technology Conference. With us for our next presentation is Skyworks Solutions and presenting from Skyworks is the CEO, Liam Griffin. We were talking on the break. Liam and I go back longer than I care to remember. So Liam, thanks for coming out with us today.

No problem, Chris. I appreciate it.

So Liam, maybe I'll start, and we'll get into some of the details, but I'll just give you an opportunity to kind of get us started with just broadly some of the opportunities available to Skyworks. We know about the 5G opportunity. You guys are capitalizing that nicely. But I think you're going to tell us that the opportunities are pretty broad for the company.

Yes, absolutely. I mean, certainly, you know us for mobile, but we've been doing a great job expanding the portfolio and driving diversification, doing it both organically within the core business and then also, leveraging the new opportunities that we've acquired with the Silicon Labs opportunity. So, we see incredible new vectors of demand for us, Chris. The technology that we bring to the market is really critical. And as you see now with the supply chain issues, how critical and important it is to have a company that can scale those devices. And so we spent a lot of time crafting our fabs, leveraging everything from our gallium arsenide in the US, going to Japan for filtering, engagements in Singapore and Mexicali to really drive that. So, we feel good about the opportunity and doing everything we can to try to get product out. There's quite a bit of demand there. And on the other side, the diversification theme continues to grow. Our solutions in Wi-Fi have been phenomenal and continue to see great demand, continuing to drive 5G and further cycles in mobile. And then just a vast array of broad market products that we've been able to deliver. And so in broad markets, for example, we're talking about a business now that's about $1.4 billion in revenue. So, you followed our company for years, and that's a pretty big number for Skyworks with a lot more room to go and a lot more opportunities that we haven't yet consummated.

Right. And maybe a place to start is that yourselves, like a lot of the industry, there seem to be more opportunities out there than you're able to address at the moment, which is a bit of a high-class problem. And I know that's consuming a lot of your time right now. Maybe you could talk a little bit about some of the supply constraints that Skyworks and the industry is facing and how you're working through those now.

Yes. Sure. Well, I mean, just to frame it at a high level, Skyworks is a unique company. We develop, design and often manufacture all the way through packaging in our own facilities. And it isn't just about the scale, although scale is important. But the way that we go about it is we craft and curate technologies that are purpose-built for the end solution. So, what I mean by that is that at inception, we're developing a filter or leveraging a certain method of gallium arsenide and bringing our packaging together. We know exactly where it's going. So, we don't have a great dependency on third parties. I mean there's some incoming upstream fabs that we lever. But the lion's share of our production comes in-house. So, what's interesting about [indiscernible] and we've all learned in this industry that it doesn't take much for a gap in supply chain to really wreak havoc in the industry. So, for Skyworks, we've been navigating this better than most because of those assets and because of those investments that we put in place, working with some of our third-party players in fab land that is outside of Skyworks, right? So, we happen to do that. But today, the problem is, and you've heard the same analogy from others, but if you could have 99% of the bill of material ready to go, but 1% is not available, it's going to create some wrinkles and frustration with customers and just friction around free flow of demand, supply and demand. So, that is starting to wane off and skies are starting to brighten a little bit. Again, fortunately, the investments that we made, fueled by the way, by our financials, which we can talk about in a bit. But our ability to drive -- to drive that success with CapEx really comes from the quality of the business and the earnings power that we bring to the market. So, that's kind of how we see it. And honestly, as we come through this, Chris, we're going to come through this better than we were and where we started because we built a new set of customers and relationships. We've done some really good work supporting customers that urgently needed our material, and we were able to expedite that material because it was in the walls of our company. So, that's kind of how it's going. We're also advancing the technology on another vector, Chris, by really expanding the usage cases around our filter portfolio. So, we have our Temperature Compensated SAW filter, we have mid-band, and we're also developing high-band BAW solutions, actually more than developing and we're actually delivering them at scale. So, there's a great deal of internal investment in technology and scale together, knowing that those technologies and investments are going to certain end markets, maybe it's broad market, maybe it's high end mobile, but there's no guessing. We know exactly where we're going to take the technology and what customers and markets we're going to pursue. So, that makes our strategy a little bit more cohesive and a little bit more resilient when you have this kind of a choppy supply chain environment.

Right. So, you mentioned that the skies are starting to brighten a bit. Maybe you could expand on that a little bit. And I guess my perception is that for your business at your largest customer, Skyworks has not been the bottleneck. There's been bottlenecks elsewhere. But I imagine there's other places where secondary markets for you maybe were your bottlenecks. Maybe you could kind of put that in perspective of where the sky is brightening and where and for what?

Sure. Yes. I mean the major significant accounts are in mobile and also in broad market, kind of the Tier 1 players in those spaces, we're seeing more flow of demand and execution and things starting to improve, right? Again, we have the ability to deliver, but we do -- we are dependent on fuel outside supply. So, that looks pretty good.

So, that's availability of other suppliers, making that customer more able to make more units and therefore, consume more of yours. Is that correct?

Yes. Exactly. And so, again, 99% is there, 1% is not there. And then finally, a couple weeks later, hey, that last 1% is ready, boom, the product is out, right? So, that kind of -- that kind of action is starting to gain a little bit of strength on the positive side and I think it's industry-wide. And it's a matter of limiting your risk and making sure that you have the capability to pivot as the market pivots. And I think owning again, all the things that I said upfront about having control of your factories and your assets and your people under one roof makes it better for us and better for our customers. The more challenging parts of the portfolio is when you get into the very granular pieces where it's very high mix and kind of lower unit volume. Those areas are a little trickier. And it isn't because we can't execute to that, but that's where we have more upstream third-party sources that are really still battling right now and they try to get even in terms of demand -- supply and demand. So, it's not the lion's share of the business at all, but there's the level of our portfolio that is a little bit more diverse and broad and more dependent upon third parties on the fab side. So, that, that -- that wheel is spinning, but we can do better and we are going to do better. We can see the light in front of us here. But if you look at how the impasse would roll out, it would be more -- we're doing very well with the Tier 1 players and the larger mobile players and even the significant broad market players and then executing within our factories, as I noted, and then continuing to drive demand. And then second, now hitting some of the lower volume, high mix players. So, that's where it goes on the supply chain. But the upside of this is that we've really expanded the roster of our accounts. So in some cases, we've had companies come to us that have never been a customer, never been a Skyworks customer, probably should have been, but hasn't yet, and we formed relationships with these companies. And these are significant players. So, we've been able to demonstrate a capability that's been very attractive to our customers, current customers and new customers as we go through this supply chain situation. And as we talked about, we all think it's going to -- it's going to mitigate, and we'll find our way in a better position. But again, having that flexibility, customer relationships, being able to curate a solution, craft a solution, customize your product. I think all of that is going to lead to some great success as we go forward.

Right. And do you feel that, that becomes a tailwind as you go to next year, where that -- some of these things loosen up, some of those lower volume customers? Is the demand still there and just waiting for product and therefore, becomes a tailwind as you go to next year?

Yes. We believe that. I think the opportunities and the design wins and the work our teams are doing in the labs right now is all positive. And we see, again, the supply chain issues abating and the opportunity for us to demonstrate the great technology that we have here and the level of customization that we bring too, which is important. And as the market evolves, there's no question that the connectivity sector is where you want to be, whether it's Wi-Fi, whether it's 5G, whether it's Bluetooth, all these types of connectivity nodes are not going away, and the performance requirements continue to go up. All good for us and you've heard it from me and you've heard it probably in other areas, but complexity for Skyworks is our friend. We like to do the hard things and simplify really difficult problems for our customers and bring those in an elegant module like environment. Sky5, for example, where we integrate all the key components within a single platform and provide that to customers all over the world, but each one could be highly customized and different. So, that kind of a business process we'll continue to roll. It's not just in mobile. It's in broad markets. It's in the Wi-Fi portfolios. We're going to be doing a lot of that same kind of positioning with the Silicon Labs acquisition, leveraging that strategy that has worked so well for our company, and we're going to continue to lever that.

Right. What about with respect to seasonality for the business? And just as we're in the supply-constrained environment, what we've seen in the past is that, especially when you leave customers constrained through the year, there was some bleed over in there into the beginning of the year. But we also normally notice that there's a switch over to Android as you go at the beginning of the year, where even the foundries, that just free up a bit once the seasonal demand is done for iPhone. How do you see that playing out this year? And does some of that demand still bleed into the beginning of next year as because of some of the supply constraints that we're seeing now?

Yes. No, you're right. I mean, we normally do see in that kind of a baseline environment, you see the Tier 1 players come through the holiday season in the US and then you have an Android follow through getting into the January through March quarter. We think that will continue to happen. And I think there's more opportunity for us because the ability for us to do the hard things. It's not going to be -- it's not going to be as clean as it has been because of all the -- all of these gaps in supply chain and having to configure in different ways. Like I said, that's all good for us. That's on a relative basis. We will perform better in a more challenging operational field. We just will. And we also have the IP and the technical know-how to drive those solutions. So, we're -- I think we're going to -- you're going to see that we're just much closer to the customer and we're in the conversation as to how to get to the right answer. It's not going to be cookie cutter. Like I said, we're not a put it on the shelf distribution company, take your parts, we are a company that crafts, curates, works with customers, finds the best way to create the optimal solution that hits the performance merits and then for Skyworks provides the level of profitability that we deserve. So we actually, in some ways, it's a better environment for us when things are a little bit more difficult because that's -- that's where the cream rises to the top, right? So, we'll continue to do that. We definitely think that supply chain situation will clear itself out as we get into 2022. And then we're back to high-performance technology, whether it's in the broad market business, whether it's in markets like automotive, markets like mobile, we're ready to go on all those vectors.

And what are you planning for capacity as you go out into '22-'23? What sort of investments are you going to make? And I know with some of that, you said, you've relied on some of the third parties for some things. Do you pull some of that in-house because that's -- you spoke over the years is that one of your competitive advantages is the in-house manufacturing?

Yes, yes, exactly. I'm glad you brought that up. So, to kind of back that up a little bit, and obviously, you know these numbers. But we went from our fiscal 2020, $3.3 billion to $5.1 billion year-over-year, okay? So, we're talking about $1.7 billion of incremental revenue. That would not have happened if we didn't 6 to 9 months prior position ourselves with great scale and capacity and putting that CapEx in early in on-time to drive those results. So, that's -- those kind of numbers, it's share gains globally. It's driving technology that just wasn't there before that we had to make ourselves in our own sites to drive that kind of outcome. So, we're really proud of that. And I think it's been missed actually in the valuation of the company right now. And it demonstrates the scale that we can bring. Again, this is a 1-year move with COVID by the way, and still getting nicked up a little bit with supply chain. Despite all of that, the technologies we brought were valuable enough to drive a $3.3 billion to $5.1 billion top line. Those are big numbers. So -- and by the way, that's -- we're not stopping there, but it demonstrates our ability to execute. So, when we think about the next legs as we go forward in the markets that we're in and the markets that we'll pursue, having that ability to fund strategic capital is going to be a weapon for us and we're going to continue to fund that. It's been highly accretive. And again, we know what we're making. We're not -- capacity for Skyworks isn't, we have 10 machines, now we have 12, now we have -- it's not that. It's we have this technology. We keep it. Now we're going to build bulk acoustic wave. Now we're going to lever millimeter wave, but whatever it may be, it's the ability to build and craft in-house technology and then put it on your own production line. So, we know exactly where it's going end-to-end, from design and inception to finished goods. And that is a very unique -- very unique business model for us. It's not cheap. You have to fund. You have to have the cash flow to get it done. But the returns on that approach when successful, are very strong.

Well, and secondly, into my next question, which is, this is not cheap. And what we've seen elsewhere in the industry and really, the first time I've been doing this is, is broadly prices starting to go up. And the justification for that is, certainly, third-party manufacturing costs are going up. That's getting passed along to customers. Customers seem to be willing to accept it, given the supply conditions. Does that hold for the RF space as well? And I mean, question one is the whole RF space. And then secondly, does your position having so much more capacity in-house insulate you from some of those to give you some sort of a competitive advantage in an overall pricing environment where pricing is going higher?

Yes. Well, I think the RF space is still is massively undervalued, honestly. I think the technologies that our company and our peers bring to the market are exceptional. They're vital, they're critical. You can't live without. I mean it's -- that's just a fact. So, that is a very, very important part of the market in semiconductors, and I think we're really happy to be one of the leaders in this industry. And obviously, there's some other peers as well that we compete with, but this is a great market to be in. And you and I were talking a few minutes ago before we started the call about, a, what we were doing 10 years ago, how different was it the way that we communicated, right? I mean, the ability to communicate with wireless technologies has really changed the way we work, live, play, educate, we can go on and on. And that's not going to change. Those technologies are not going to change. But the performance behind it and the R&D and the investments and the technical scale, all of that is going to change. So, the demand vector is going to be there. It's going to probably get higher and more demanding, and it could change the peer group a bit. But there's no vent to the opportunity here. No one that we work with or talk to is satisfied with the level of technology performance in mobile RF wireless across the industry. We all want more. Think of the way our kids are being educated. Think the way the people are entertained, people learn. There's so many great attributes about the industry that we play in here. And so we're proud to be a part of it. And I definitely think there's going to be challenges in front of us that are daunting that will have -- that we'll have to conquer. But having those assets, the technology, the know-how and being kind of purpose-built around the products that we make here is unique for our business and I think, strategically very important.

So, where does the content come from over the next couple of years? And I think this is maybe one of the investor perceptions that certainly in developed world, 5G is now kind of penetrated. Overall, the penetration rate is not quite there. But maybe you talk about the content gains just from going from 4G to 5G. And then even in the developed markets, your biggest customer phone, is there still an avenue of content gains and for how long will that last?

Yes. Well, I mean, we've seen the incremental technology, we'll call it content, but the incremental technology reach continues to expand. And it happens because the application burden and the opportunity for the consumer to gain more is what's driving it. People really are not satisfied. They want to see the next thing. And in some cases, they don't know what they need to see the next thing until it's there, and then they can't live without it, right? So, it's kind of an interesting dichotomy there. But what we definitely know is, is that the technology really drives the end applications and it allows the interface and the user to really engage in so many different ways. And it's not just the mobile phone. I mean, we're thinking, obviously, we've got autonomous vehicles here now that are going to be important. The Wi-Fi products are going through an incredible cycle right now that would really match kind of the vector of a 5G launch, when you start to look at 6 and 6E and Wi-Fi permeating everywhere. When you think about things like the metaverse, right? We can call it what we want, but there's going to be many, many more billions of nodes of connected devices that go way beyond the hundreds of millions a year that we talk about in classic mobile. And in those markets, you're probably going to be a little bit more autonomous. You're unlikely to be plugged in. And things like power levels are going to be important. RF performance has to be really good. And the unit count could be exceptional. We're talking billions and billions a year, right? And so, I think that's where this industry is headed. And wearable devices are also right now really starting to tip a bit. We would play very well there. We have great assets. We did our deal with Avnera a few years ago. That's been working out phenomenally and also some other places that we've been looking at. So, I think there's going to be an expansion of what we call the device, right? I mean, we talk about handsets and we're doing things that are so different now than we were doing 4 or 5 years ago. And I think over the next 5 to 10 years, connectivity is still going to be one of the most vibrant elements in the market, but the form, the shape, current consumption, usage cases could all change. And that's all good for us because we're right in the middle of that. We're in the heartbeat of those technologies and then applications. And we have a voice in shaping those with our customers.

Right. We'll pivot a bit and speak to another technology, BAW. And you know, it's not where the bulk of your revenue comes from today, but you've done a lot of work on it. Maybe you could talk about how that ramps over the next year or 2? Where you see the opportunities? And how much -- does that give you just another shot on goal and becomes accretive to the revenue opportunity?

Yes. So, we've been working with BAW and working on that technology for quite some time and crafting our unique recipe. And so, we -- if you look at the numbers that we talked about, the $3.3 billion to the $5.1 billion, there's a significant piece of BAW in there. But what we do, Chris, we don't sell filters discretely at all. There's no -- there's no -- you can't buy a BAW filter from Skyworks. But you can buy a SKY5 solution that could have multiple unique BAW filters that are packaged and curated and side-by-side with core RF to give you a full solution. That's how we go to market. So, we're leveraging our BAW assets. It's very high scale right now, but you don't see it until you get into one of our modules and identify it. So, that's happening. We're raising our ability to go into new spectrum. Our feedback with customers has been exceptional. And as you may know, we try to -- we try to shoot for the very, very highest performance and that rewards us with an opportunity to be with the highest performing players, and that continues. So, we're looking forward to that. And there's a lot of business that we haven't yet captured in that area a lot. And that's something we're going to be -- we're not going -- we are going to absolutely be engaged as we go on. So, you'll see more and more of that. Expanding that aperture technically is super important. Looking at the acquisition, the Silicon Labs deal that we talked about, we think there's a tremendous suite of products that we could bring scale to. A lot of good products there, very, very diversified, but within the level of diversification, there's kind of a sweet spot of highly scalable products that can go quickly to customers that we know already and even some customers that the SLAB team can bring us. So, there's some good karma going there and that's another vector for us as we get into the 2022 plan.

What about mid-high band? And again, historically, your sweet spot has been in the lower band with TC-SAW. Historically, that's been a big part of your revenue. Do you still have -- are you planning on capturing more of those mid-high opportunities as you go forward?

Absolutely. I mean if you look at the portfolio now, I can't give you all the puts and takes here, but I will tell you that the mid and high-band are very significant and drive a tremendous amount of revenue. It will drive a lot of revenue in '22. So, we -- those products are there. They're there today and they're in production. So, mid-band, low-band, high-band, all of that. And it comes with the right filtering and the ability to coexist to create that complete solution. So, you're not going to see -- you're not going to see a bulk acoustic wave product on the shelf that you're going to buy from Skyworks. You're not going to see that, but you could see a Sky5 engine that could have mid-band, high-band, low-band pad, plus other elements to give you that complete full solution. So, that's how we would go to market. But we are very much in the BAW business here now, lot of hard work. It's -- and again, there's more and more spectrum out there that we can capture. But that was one of the -- one of the elements that supported that $3.3 billion to $5 billion. That $1.7 billion incremental revenue path, great deal of that was levered by some of our BAW technology.

Right. I think one of the other areas has been Diversity Receive, which is one of the technologies you were early on. I think you have a very large share of that market today. Maybe you talk about the opportunities there and maybe it's more about -- that's an area where I'd say you'd be defending your position against competition. What do you think is your competitive advantage there? And do you think you can maintain and expand your share of Diversity Receive as -- you imagine Diversity Receive still becomes a bigger part of the market?

Yes. Yes. Diversity Receive is really important. It's really bringing the downlink volume and speed way, way up, right? And we kind of -- we created that product really through engagement with some top-tier customers that were having difficulty matching uplink and downlink and recognizing so much of the energy is coming down, down, we got to figure out a way to match that. So, we created that technology called DRx. And we continue to do things like that, that are unique. And again, that's a product that if you look under the hood, there's a lot of different discrete technologies that come together. And not only do they come together, they come together in a way that's highly efficient. And one of the things that everybody knows about RF and wireless, you're not wired. And so power and current consumption is really important. So, things like Diversity Receive, they're intelligent devices. They know when to turn on and when to turn off, and they know when the data rates need to be very, very fast or not. So, there's all of that kind of nuanced under the hood and it drives our products. So, we're always developing a solution that comes about with a customer problem. A customer has a problem, they come to us. We talk about it. We're in the labs, we're shoulder-to-shoulder with engineers, maybe it's the customer, maybe with Skyworks and [indiscernible]. It's a lot of conversation and there's a lot of collaboration to get to the right answer. So, you don't see cookie-cutter products from Skyworks. We don't sell filters at all, I mentioned it already. We don't sell like a standard TC-SAW filter or SAW filter. We could sell those all day, but they're commodities. That's not our business. So, we want to move up and hit the high-grade and the mid-grade and continue to move. That's what we've been doing. So, there's a lot more in the R&D pipeline right now that we can't share until we're ready to go to market. That's sort of our style here. But there's definitely no end for the demand. We're seeing a lot of inbound requests for different types of technologies, levered on speed, levered on efficiency, current consumption and the application usage. So, with all of that, that experience and that technology can go way beyond the classic handset mobile device, moves into things like the Wi-Fi world, the metaverse world. Wearables, I think, are going to be a pretty significant part of this industry over the next 5 to 10 years as well. And the form factors will change, but the companies that have the core building blocks and have the aptitude to be unique and crafty and flexible and the architectures that we bring, I think, are going to be really critical. So, we're thinking about that as we go forward.

Okay. You know, kind of moving into some of those broad markets. One of the big events for you is the acquisition of the business from Silicon Labs. And maybe you talk about that a bit, and in particular, how you expand that business? How does that business grow faster as a part of Skyworks compared to where it was in the past?

Yes. Yes, sure. Good question. Well, when we pursued that acquisition, we were thinking about what it's going to be when we get it, right? So, that's kind of our mindset. We weren't looking at the deal for revenue or, hey, this would be nice to have. I mean it was -- it was an opportunity that we really liked. And basically, the playbook for us is this is a company that's got great technology. We need to scale it. It's high mix, lower volume, but the portfolios and the products that they have are really good. Very strong, high-performance high-quality, great portfolio. So, we're now leveraging that and we're going through the product line and looking at where the opportunities could be raised and brought to scale with multiple customers that we have right now and also working with the existing portfolio that came to us and how we can look at that portfolio and scale it better. So, it's kind of two ways. I mean you can attract new customers with the technology. And then in some cases, where the technology is already in place. But back to your capacity discussion at the beginning. The SLAB team, great company, and we love the acquisition, but they didn't come with a great deal of scale operationally. So, that's something that we can do and bring that -- and bring that within the walls of Skyworks. And at the same time, take advantage of the great customer relationships that the Silicon Labs team has brought. So, if you think about broad markets for us now, we're at 1.4%. We're going to grow that thing much faster now because we have a roster of companies that are already customers now for Skyworks by way of the SLAB deal. So, there's some unique things in that transaction. It's still very early. And there's a long way to go. But we like what we see. And I like even more what I think we're going to do. So, kind of stay tuned on it. But we're thrilled with it, great team in Austin. We're collaborating very well. The integration has gone on -- gone very well, it's exceptional, actually. So, we're working through all that. And I think new products, new customers, it's going to be great harmony as we go forward with that transaction.

So, with that, I mean, what you've talked to us in the past about is confidence that, that broad markets business grows double digits sustainably into the future. Are you still comfortable with that? And I guess there's -- investors are naturally paranoid that some business might have been pulled forward. The Wi-Fi business did very well in the pandemic. Do you still have a confidence that you'll still grow that business double digits from these levels sustainably into the future?

Yes, absolutely. I mean if you look at where our numbers have been here, we're up 31% year-over-year, Q4 to Q4, these numbers, they're broad markets. We continue to expand the customer reach. We continue to create unique content within that reach of customers and applications. There's a lot of inquiries that we're getting inbound with customers that want help from us, how to develop product, big companies, too. We're not talking about small players and how do we get more efficient as a team. So, there's going to be a lot there. And then like I said, some of the great IP and assets that we brought forward with the SLAB business are right for high scale. And we're in the very, very early innings of taking that product line and bringing it to known customers that absolutely could use this technology, but just haven't been customers before. And so we're going to be able to drive that. So, our key Tier 1s will have a great opportunity to look at this portfolio and we'll find ways to create some great engagement across the board.

Okay. I'll pivot to margins a bit. And one of the things that you've noted through the pandemic is you've taken on some additional cost to make sure that your customers were taken care of, and that's been a bit of a headwind to margins. When do those headwinds come off? And is that something that we can expect to be a tailwind for margins next year as some of those COVID-related costs hopefully start to abate?

Yes. No, good question. And I think our margin trajectory had been coming up very well and strong. And obviously, we want to do better. Our operating margins are still very, very high, in the mid-30s or higher. So, we've been free cash flow more. If you look at all of the metrics, from top to bottom, you've got some pretty powerful numbers. And I'd match them against our peers any day. I think they're solid. Obviously, we can do more, and we will do more. But as we go out, we certainly had some bumps and are still enduring those bumps with supply chain. Our team did a really good job navigating COVID. And again, I've said it a couple times, but going from $3.3 billion to $5.1 billion in a COVID environment. That wasn't much of a supply chain headwind there, that was just Skyworks driving it. So, now on the supply chain side, things are getting a little bit better. We have much more control than others in driving that. So, I think we should be okay. And then when we get to the other side of it, you've got a lot of new technologies that are being developed right now in our labs. We know what we're shooting for. So, one of the things, Chris, and I think you know this, when we talk about the business, we don't speculate. Like we're not a -- put parts on the shelf, hope people buy. That isn't our thing. It can be for some other companies, but that's not in ours. So, we tend to go and work with the top-tier players across the board, and it's more than 1 or 2 companies. We're talking about a lot of companies that are high scale, capable and work with them on how do we get you to the next level, whether it's going from 4G to 5G, whether it's the next node in Wi-FI, whether it's wearable technology with audio, whatever it may be, we work through that. So, we kind of know what's coming and we provide options to that customer and how to make it better. What do you really want? Is it performance? Is it current consumption? Is it -- what markets are you going to pursue? What's your price point? All that stuff goes on. It's very different than typical semiconductor where you're basically just driving nodes every year and driving your scale without thinking about where the customer is. We like to look at what the customer wants. And then figure out how to solve that problem rather than tell them this is what you could buy. So, that's kind of our play and we're looking forward to it. We learn a lot from that. You learn a lot when you're in those situations. And you tend to make less mistakes or if you do make mistakes, they're smaller bets. So, we're excited about that. And we think going into 2022, a lot of the stuff, a lot of these headwinds will abate. The opportunity for us will continue to grow. And the markets that we're in right now are the markets that you want to be in, they really are. And so we're excited about the opportunity as we're going forward.

Okay. And how about use of cash? And one of the things when you did the acquisition from Silicon Labs, you paused the buyback for a bit. I think your CFO's comments in the last call sort of, he unpause -- implied that he was unpausing that. So, maybe you could talk about, one, your commitment to buybacks as you go into next year, do they resume? And in general, what are your plans for uses of cash? Is it going to be mostly buybacks? Are there still strategic opportunities such as like Silicon Labs going forward?

Yes. I think everything is really an option. I will say buybacks are definitely on the table. So, I wouldn't worry about the acquisition was not a very, very large transaction to do SLAB. So, that's not at all impacting us. So, buybacks are on the table for sure, continue investments in capital strategically, absolutely there. We are maniacally focused on the performance of our financials. So, we can do better than what you're seeing today because is in our numbers today, it still has, these headwinds that we've talked about over the last half hour, right? So, there's room to move on that. And then continuing to look strategically at opportunities if we see the right ones. And you know, we've been very conservative with it. And one of the reasons is that we have great opportunities internally to pursue. So, it's one of the reasons why we've done less on the M&A side, but the deals that we've made have been strategic. They've worked out well. We'll keep our aperture up there. But the cash flow that we put forward is really solid and buybacks are right there. So, that's something that we'll be able to continue to pursue as we pursue other strategic opportunities.

Okay. We'll look at the clock, I think we're just about at the end of time. So, I think I'm going to leave it there. And Liam, we appreciate you being here and I look forward to doing this in person rather than through the TV camera from -- in the near future.

Sounds good. Thanks, Chris. Appreciate you guys hosting and have a great afternoon.

All right. Thanks, everyone for joining.

Take care.