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

Okay. Let me just start off with this disclosure. For important disclosures, please see Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep. Thank you. I get yelled at for not reading that. So I apologize. Anyway, I'm Joe Moore, Morgan Stanley semiconductor analyst. And very happy to have with us today Phil Brace, who is the newly minted CEO of Skyworks. I would say this is actually the fifth new CEO that we've had at our conference. I'm cheating a little bit with you. But actually one of the legitimate...

Yes, I guess the semiconductor CEO's are dropping. I don't know.

I think it's great. I think it's a really good opportunity for people to kind of get your perspective and meet you for the first time. So we'll keep the questions fairly high level, at least for a start and then open it up.

Maybe you can start with if you could just give us your background on yourself, what are you to Skyworks and kind of how you're thinking about having this new role?

Yes. Well, thanks for the opportunity. It's always a pleasure to come here and meet with the investors. This is actually my first I guess, foray out week 3, day 3 for me to do that. So it's great to be here. I've got a long career in tech. I've been 30-plus years. I started at Intel. Back when Intel was a very different company. It is now Andy Grove, Craig Barrett, that whole regime. Lots of time in semiconductors, LSI when we sold it to Avago-Broadcom, which kind of started the whole Avago-Broadcom kind of role, if you will, different tours of duty both at Seagate, then went into private equity software. And my final I did the CEO of Sierra Wireless that was actually a Skyworks' customer. We ended up selling that to Semtech and I did some boards. And frankly, I got a recruiting call for this one, and I immediately jumped at it. For me, this is one of the most exciting opportunities on the planet, and I can talk a little bit about that why that's kind of where I'm at.

Yes. I mean, I guess I like the company a lot as well, but I'm not -- but why do you think that -- why are you so enthuses for that?

First off, I love the technology and I love the space. I mean when you think back, like I'm old enough to remember the 14.4 bps modems, beep, beep, beep, all this other stuff, and you think about one of the things that's enabled the world that is around us is networking technology, and specifically, it's wireless technology. I mean there are billions of devices out there. I think there's something like 2 billion 5G devices out there now. By the end of the decade, there'll be 30 billion. It's really complex technology. One of the things I've been impressed with so far is just the people I've met at the company are some of the smartest people I've ever been around. I love that. I love the complicated problems. I like solving complex problems. This is a tough one. And I think that there's a great set up here. I think we've got opportunities to earn more business. I think there's more RF content. I do think there's an AI wave coming. I do think we can expand our business in the broad market space. I just think the canvas is just completely wide open. And frankly, we've got a great balance sheet and a great position. So I mean, for me, this is like an instant no-brainer, how do we turn this into a $20 billion, $30 billion, $40 billion, $50 billion company, right? That's great.

Great. Good to hear. What is the vision here? How do you plan to steer the company? There's been, obviously, very good growth in RF, albeit customer concentration and some hiccups that we'll talk about. But also there's been an emphasis on building other businesses inorganically, diversification. Just where do you come down on those things?

Yes. Well, so first off, honestly, we have to defend the capital. There's a lot of noise around what we're doing with the largest customer. And the thing is that's the neighborhood we live in, you may not like it, but that's a business we're in. We develop RF components, some of the best, most complex RF components in the world. and we have the best customer in the world for that. And is it a challenging customer? Absolutely. The thing is the rules are clear. You deliver the best products and you win. You jump ball, you split and you deliver sh**** products and you lose, period. And you have the chance to do that every single day. And we've got an edge. I have met all the employees have gone around and continuing to meet them. I like the edge. We've got a little bit of an edge there. So it's like timing the ball back again. I want to go compete and win. So I like that. That's got to be job one. Job 2 is, look, we've got to diversify this company. We've got a tremendous broad market space. We've got a great IoT edge base. We've got a great industrial position. We've got autos. We've got a lot of capability there. And I do think we have the balance sheet and the financial performance to continue to look at M&A, to expand that business if we have to. So priority one, defend the castle, put a few products back in our competitor's backdoor, compete aggressively, go win and then continue to expand our business beyond that, right?

Yes. No, that makes a lot of sense. I mean, I guess if the market doesn't give you guys a multiple on the customer concentrated RF part of the business, using that then as a currency for inorganic growth can be tricky. And there's not -- having a low multiple, I'm sure is annoying as a CEO or CFO, but you can actually buy back stock. I mean there's a lot of good things that can happen if you trade. So how do you kind of balance those things? So like you have a currency that I think we all think is sort of undervalued on what you're capable of doing long term using that currency to diversify in other businesses, just how do you think of the tradeoffs?

Yes, it's good. I mean, obviously, we traded a discounted multiple customer concentration as a proxy for volatility, right? People don't like to evolve -- in fact, some of the volatility just played the hand now. So we traded discounted multiple. It's probably not unjustified, honestly, given where we are. Now -- having said that, we've got to turn that. We've got to start turning the ship around and actually start growing and growing that business, right? And then I think getting back to growth will help us kind of relieve some of that pressure. And you're right to the extent that there are lots of different properties out there that trade at tremendous multiples spread compared to where we are. So we're going to be very disciplined about how we look at that and we're just going to be focused on how to do that. We have actually been returning a lot of capital to shareholders, dividends, share buybacks, and we will -- frankly, if we don't -- my goal is to continue to find things diversified, but we'll continue to be disciplined about allocators of capital, and we've got the financial position to do so.

So given -- you talked about a pretty diverse background. You come from storage, semiconductor, software, IoT, all the things. What are the big mega trends that you're looking for here? And how do you think Skyworks can benefit from those?

Yes. I actually love -- like when you look at it, so some of the huge mega trends there. First, you just go back to base connectivity right? I think that goes back to the networking space, you ask yourself the question, in 5 years from now, do you think there are going to be more or less wireless devices connected on the planet? The only answer is more. And the only way you do that is wireless technology. And we are one of the top handful of people in the world that can do this stuff we have. I mean we talk about -- I'm talking to the engineers and they're designing sub micro-nanometer things that vibrate at 1.1710 gigahertz and don't vibrate at 1.1702 gigahertz. I mean this s*** is like dark magic, it's really complicated. It's hard, and we're at the forefront of that. So I love that. I mean that is just the place you want to be, complex card stuff. The second thing is this AI, when you think about it, there's a lot of focus on the AI that's happening now. And sometimes the way I think about it, this is -- we're focused at the base of the tree. We're building data centers that go off and do all this crazy stuff. At the end, you've got to get the data and stuff out to people like you and me, and that's going to be done wirelessly. So there's a great opportunity there. Autos is another one. You look and go, gosh, I mean I person -- I have an electric car. And actually, I think they're kind of undermarketed. For me, the experience is better. The technology is better, the driving experience is better, and I think this is just inevitable. And are they going to be more connected, V2X communication near-field communications, Bluetooth, WiFi, cellular, you think about all the accesses of innovation there. So I personally think there's a ton of tailwinds. There's a tailwind in RF innovation, there's a tailwind coming with AI because you look and you go today, mobile devices have one of the longest refresh cycles in the industry, 4.5 years, you can imagine even taking 6 months off that gives us a big tailwind. You've got RF content with new spectrum coming, you've got AI, you've got infrastructure, you've got IoT edge. I mean the number of tailwinds we have, we just have to execute and deliver and expand. I mean it's -- I couldn't be more excited about where we are.

Yes. So you just talked about a lot of things I'd like to follow up on a couple. The AI phone, I guess what does that mean to you? Just to start, and I think when LLMs first became a thing, people are thinking we're going to do what we're doing in cloud. We're going to do that on the phone. And then that's kind of morphed away from that. We're going to have different services on the phone. Now with DeepSeek maybe if we're coming back to that a little bit. But just how much of the innovation of an AI phone will happen in cloud? How much of it happens on the device? And then what is the ramification for the RF ecosystem if it's on the cloud or on the device?

Yes. I think that's -- I mean, first off, we don't exactly know how this is going to play, right? I think we are just in a -- I was talking to Mark earlier in the day. I actually we are in just a nascent -- I feel like I'm back in the '90s again with where we are in terms of innovation and what's happening. I mean there's still stuff going on every single day. So that's what you guys said about that. So when I look at the effect on our business, I think there's 2 vectors. One, I think you could see an element where there's more intelligence and more things happening at the edge. And I think that that will lead to an upgrade cycle and things like that, that will happen. I also think that even if more stuff happens in the data center, which ultimately will, right, you've got all these guys spending tens of billions of dollars a month on capacity and capability. I do think that it's going to drive -- people are going to look like your 3- or 4-year-old phone now is going to look really old. Where we're now, it's like, oh, iPhone 12 still looks fine. I think the pace of innovation is going to be there. And I think that -- some of that drives new RF content because they're going to want to think about just what actually determines a lot of the RF now is transmit, right? And so when you go to new capabilities, you're actually uploading more stuff Well, you actually need to actually have better transmit capabilities. So maybe there's some new technologies, MIMO on the transmit side, watching the power down because some of the new frequencies, they are higher frequencies. The challenge with higher frequency is lower propagation. The way you solve lower propagation is actually have higher power things in the devices itself. Well, higher power isn't great. So how do you do that with MIMO? I just think there's a lot of innovation that could happen there. So I think it's more intelligence in the device. I think it's driving an upgrade cycle and improving RF content.

Yes. That makes a lot of sense. And then the other elements that you mentioned, you talked about some of the broad markets benefits from kind of the wireless ecosystem. And how much of the diversification is around that? It's not buying revenue, buying margin, but it's buying 5G-enabled capabilities where suddenly everything is connected to everything else. Is that kind of the vision for how you put these things together?

Yes. I mean I think, look, I mean, I think what I -- there are some things I really like at our core base, I like the fact we're in the RF space. We have unique differentiated technology. You look at our broad basis, right, there are some businesses underneath that are really like, I like the timing business, right? There's a lot of unique stuff that's happening there, and I think there's a broad runway. And that has exposure to nice things, that has exposure to the data centers. I like the auto space, we've got some good power capability there, right? You think about GaN capability. You look at -- think about the other things that do high voltage. So I like those spaces as well. So I mean, that's why I kind of like the niche as well, right? We've kind of got specialty experience and specialty semiconductors, which I think, frankly, is just going to continue to expand, right?

So it's still leveraging off of the core capability of the company into these spaces.

Yes, I think so.

That makes a lot of sense. So you mentioned the disruption at a key customer and you're a few days in, so I don't want to put you on the spot too much, but how do you think about mending those fences and getting back to where you want to be?

For better or worse, I mean, they are the best customer in the world to have. If you didn't have a customer like that, everybody -- the conversation I'd be having you with you is why don't you have them? I mean, they demand excellence in everything. They demand excellence in performance. They demand excellence in cost and they demand excellence in operational execution. And you may not like it, but that's the game we play and the rules are clear. You deliver the best product, you win. You have a jump ball, you split and you deliver a crappy product and you lose. And so in a particular case, we delivered a jump ball. We didn't lose. We delivered a jump ball. And as a jump ball, they're going to split. So guess what? We need to do a better job. I don't like the rhetoric of us being "screwed" by them or anything else like that. We need to take it into our own pocket to deliver the best products, period. And that's what we've got to do. And that's -- and we've got some of the smartest people in the industry. I love it when I went to visit them, I've obviously visited them. They proactively -- keep in mind, we do more products for them, more RF products than anybody else in the industry. We've been working with them since iPhone 1 or beyond. And we are pretty much every single RF products they have out there. So there is no confusion from them about how important a supplier for us. However, the rules are also clear. We've got to deliver great products. So it's our job to go back and do that, and that's what we got to do.

Yes. Yes, it seems like you're bringing the right mindset to resolve it. And I guess, again, I don't want to put too much pressure on it. But the timeline of fixing it, you seem to -- you have to wait for new platforms, obviously, there's big baseband transitions coming out. There's all kinds of things coming I mean how long does it take to...

How long does it take? Well, look, I mean, here's the good news and the bad news. The challenge with this business which is also the opportunity. The challenge is you got to win it every year. The opportunity is you get the opportunity to win every year. So guess what? We lost the last game. We lost the game. We don't like it. We're picking up our ball. We're going to compete against this time, and we're going to compete the cycle after that, and we're going to compete the cycle after that. Period. That's what we've got to do. Now that doesn't mean we can't walk and chew gum at the same time. I don't want anyone to walk out of here going, oh, we're slowly going here. We know where our bread is buttered. We've got to deliver great products, and then we've got to continue to diversify the business. And we just got to do it. We've got to have conviction to go get it done.

Okay. Great. So leadership transition, can you talk about that the immediate priorities that you've identified, the culture of the company, how are you thinking about the transitional elements here?

Yes. I mean, look, obviously, I think with any sort of leadership transition, I think there's an opportunity to reassess certain things. There's an opportunity to bring some new culture into place. And one thing I'm trying to do. I'm trying to spend my time first off going to meet as many people as I can. I have been super impressed spending my time meeting the engineers and spending my time focused there, going out meeting the customers and then meeting some time with investors. I'm doing a little bit of a listening tour. I would say some things I've been really impressed with so far. I think I mentioned it, IQ of the people, super smart. I love the edginess because...

Talk about the investors, right?

Yes, exactly. Investors too. I like that. And you know how the rule is played with the customer. We already met them and going to meet more. And so I'm just spending some time with that. I think I'm also trying to stay away from this -- like we need to control what we can control, build great products, like that's what it comes down to, building great products. Forget about this fact that there's all this coming, oh, did we get leveraged out, do this and not the other. That is just freaking noise. Of course, there may be some of that, but the way we solve this problem is building great products. And I think I'm focused there. And I think with the new leadership, there comes the opportunity to look at everything we've done, and I'm going through to do some portfolio reviews, and I'm doing what you'd expect. But I'd tell you, I've been working a ton of hours. This is day -- week 3, day 3, and I have more energy at the end of the week than I do at the beginning of the week because I'm just so -- there are so many opportunities. There's so much stuff to do. It's just the field is open.

The CEO that said that to me when she first took the job, was Lisa Su, we just got to build great products. And that's -- I love that mindset because I feel like that's really the thing.

Everything else flows through from that.

Everything flows through that. Can you talk about the culture values of the company and how you intend to make an imprint there?

I think one of the things -- and I guess I would -- I've got Kris and Raji here that are probably a little bit better. They're over there, if you ask me to really -- they're probably the better ones to ask the culture change. Look, what I try and infuse is I mean this is what I talked to everybody about. When everybody talks about their career, right, they don't necessarily talk about the time they got the biggest bonus, the time they got the biggest promotion, they don't talk about that. They talk about the time when they achieve something excellent. When they did something that no one expected them to do, when they did something freaking great. We have that opportunity right here right now. Pick up your shorts to deliver the best product and turn this company into a way bigger company it is now. And I'm just trying to instill that sense of urgency, fire, passion that's in our control, go get it done, right? And that's kind of where I'm trying to fire everybody up. I think there's -- honestly, the company has been -- I don't say hibernating, but I think we haven't been as aggressive as we could be. And I don't think we've been as focused as we could have been. I think we've been a little bit too complacent. So I'm just trying to get up there and get everybody fired up on achieving something great, and that's what I'm trying to bring.

Yes, that sounds great. How do you think about maintaining that competitive edge? And I guess it's pretty clear how you think about the RF products based on what you just said. But when you think about the broad markets, when you think about expanding the scope of the company's activities, how hands-on do you plan to be? Will you be involved in every kind of go/no-go decision at the product level? Just how are you anticipating reacting to all that?

Yes, I think you've got a -- I mean I think part of what you do is hire. I've always been a big believer. You're trying to hire smarter people than you and you want to unleash them to make the best decision you can. You'd be clear on the metrics and you hold them accountable for the results. Now having said that, I at my core am a detail-oriented technology guy. So I've already been digging in asking questions around, hey, how does this work, how does that work, how do we unleash the capabilities? Frankly, I'm asking questions, how do we use AI ourselves to make our own products better. If we're not doing that, some of our competitors will. So I've got some things like that are already going underway now. I'm going to install an AI that's going to have a direct report to me. Tell me how we're going to use the AI tools in every element of the company to improve what we do, either cost function,, capability, productivity, whatever, period. So I think I'll have an appropriate level of engagement, but I also need to hire smart people and empower them to be successful.

Very helpful. From an R&D perspective, where do you plan to put resources? And I guess, again, it's early, but like any particular growth factors that are already underway that you're excited about and wanting to invest more in?

Yes. I mean -- so look, I think if you look, we have many, many areas of potential innovation. If you look at just our core RF business, given the fact we also have the manufacturing, there are things we do on the process side, on the device side, on the packaging side and integration side, which is, I think, a secret weapon that we haven't really talked about. I mean we have some of the most advanced packaging capability in the world where we integrate these tiny RF components in what are effect, I don't want to say, multichip modules, but in these modules that -- I mean, we are leaps and bounds ahead of everyone else. So I see us continuing to invest in technology, process, devices, packaging, and then, frankly, how you integrate these things in total products that make the customers better. So I think there's lots of innovation. I think some of the trade-offs we need to decide is some of these advanced technologies come in the 2029, right? You got to invest ahead versus do you have more investment in products now to go expand your capacity now? And I think that's some of the trade-offs we'll need to go out and look at making.

Are there any things you don't want to do, like anything any direction you don't want to pursue any big investments that you think, okay, that's too far afield from what we're good at?

Early for me to say on that. I will say that, obviously, I'm going to go look at capital allocation and what makes sense for us, what's close to our inning. The path to success, the path to glory here is via growth, right? That's the path the glory is via growth. So of course, we're going to look to see, hey, are we looking -- do we have investments in areas that -- like I'm not afraid to divest things. In fact, if you look back in my history, I've divested things, particularly things that, okay, if it requires an access of innovation, an investment that is so far afield from where we're doing now, and we're never going to be a meaningful competitor then we may not be the best. It may be a great business, but we may not be the best owner of that asset. And so we'll look to try and if we can divest it to someone who can make a better use of it, and we can do it in an accretive way, then I'm not opposed to looking at that. Right now, right, it's early days. I'm not opposed. I haven't -- nothing really jumps out at me yet. There's something that may be. We'll see.

And any sense of the historic inorganic activity, it strikes me that Skyworks has been pretty good at it. And I think when you look at like the acquisition of the Silicon Labs connectivity business, for example, that's been a home run. Just any thoughts around that as a precursor to what you may do going forward?

Yes. I think we integrated that technology-wise decent. I think from a business perspective, we probably didn't do as good a job of that. I mean, some of that just comes down to -- we -- some of it comes down to leadership. And I'll say walking and chewing gum at the same time, right? We've got to be able to focus on our #1 customer and continue to grow that. But I think we have a very good operational platform to look at M&A. And I think that as time goes on, we'll be focused on that.

Great. So I'll pause there and see if we have any questions from the audience.

You can probably -- we got to do that. I guess webcast.

You made some comments recently just in terms of, obviously, Kris guided OpEx for the year. But as we think about your large customer now launching their internal modems, is there anything you have from an OpEx rationalization standpoint or more targeted towards that platform via -- versus legacy platforms?

Yes. So I think -- so yes, in the past, if we look back, we had to basically have dual investment streams to accommodate their internal platform versus external platform. And so we did have dual investment streams on the same sockets, if you will, right? We had to do that. That seems to be behind us now with respect to launching of their internal products. And so I do expect to have some capacity become available. And I think that comes back to the question I said before, do you choose to reallocate that capacity in incremental opportunities that we have because we don't believe that -- we believe we've got more sockets that we can target at that particular customer. So I think we've got -- and we have the technology and capability to do it. How do we balance that on maybe investing more in advanced technology that could help us differentiate ourselves in the future. So I do think we do have some capacity, R&D capacity that's going to become available. It is starting to come available that should -- we should allow it to reallocate to drive some future growth. So I think the answer to that question is yes. Does that answer it? Yes.

Okay. That was my main question, but I have another one, a follow-up. You mentioned on broad markets, some opportunities like gallium nitride, I think you mentioned something like that in power. Can you elaborate what else are you thinking there? Because that's a pretty competitive space as many people trying to get into gallium nitride power? What can you elaborate on broad markets?

Well, look, I think we've got 3 major areas. We've got the IoT edge, right, which includes a lot of the WiFi products, the device products, so a lot of things like that. I think we've got a number of access of innovation there, whether it's WiFi 7, WiFi 8, near-field communications. I think we've got a lot of innovations that will happen in that space that will basically scale with the number of devices that are connected. I think we've got the auto space. And when I look at autos, there's probably multiple areas of innovation that we've got there. One is on the power side, power isolation, all that stuff, high voltage. The other side is on the vehicle-to-vehicle connectivity, right? And I talk about all the wireless things that are happening inside the car, outside the car. I just think, in general, there's tremendous upside from that side. And then you've got kind of the infrastructure space, which includes timing products and industrial products, things like that. So I actually think there's a lot of different spaces and areas we can grow. And frankly, there's a lot of opportunities that we have both organically and inorganically to kind of add to our portfolio there that will increase our competitiveness and increase our TAM, right. So that answer your question? Okay. Great. Lots of questions.

So I appreciate the focus on best technology. But you started by saying you're in a bad neighborhood, whether you like it or not. And I'm just wondering how you actually -- other than the leadership culture changes you're trying to make. How do you fight your way out of this neighborhood? I mean this is a really -- I've followed this company for a long time and some of the problems you're facing today are more acute than they were a year ago and they were more acute a year ago than they were the year before. You have the same number of competitors that will have traditionally been in your world. You have new competitors that will service the China market where in some of the emerging markets where a lot of the growth will come from. So my perspective has been in the last couple of years, this has turned into a circular firing squad where you guys just have to actually fight it out and even success means staying still. So it's not a criticism. It's just a question like, how do you actually solve that problem without some significantly different strategy than just building more better products. And maybe it's -- maybe that view is wrong, but if it is, I want to hear it.

No. Look, I guess the comment on building different products is -- and part of it is a culture thing I'm trying to instill, right? At the end, we've got to build great products, period, no matter what, right? That is the path. And that's how we stop. I'm not trying to hand ring and say, oh, they screwed us and this kind of that. We got to build great products. I think what you're talking about is more around the industry structure, how many players in the industry fighting for fewer sockets and things like that. And I do think you can argue that consolidation in this space, whether you're a buyer or seller is an inevitable outcome. I mean semiconductors in general, needs to go down that path. What I'm trying to do is solidify our base -- our castle is under attack, so defend the castle, and then use the financial resources that the castle provides us in order to have -- to change a different narrative. I mean you look, we still got -- I mean we've got more than $1 billion broad markets business. No one pays any attention to it. As a matter of fact, every single conversation I have is around what's happening on iPhone 18 down selection. Okay. Well, to some extent, self-inflicted wound because we still answer those questions and it's such a dominant part of it. So we've got to continue to build and talk about and show progress in the other areas. And if you actually look, I think that -- last quarter was the first quarter in years, we've shown year-over-year growth in the broad market business. So I think some of that digestion period is behind us, the gross margins are higher. I think we've got some very attractive businesses there. And so I think we need to continue to do that. You can't necessarily -- it goes back to we do develop RF components, and we do have a very large customer. You can solve that problem by getting smaller with the large customer, which is ironically what we've been doing, but that's probably not my path to glory, right? So we got to figure out how we defend that, grow a little bit and then spend a lot more time defending ourselves outside. And I think some of the management change, honestly, has to do with probably -- and I'll ask the team there a little bit of -- you've got to have conviction, right? You got to have some conviction. You got to have some fire in your belly. You got to be willing to make some bold decisions to go forward. And I think that's part of some of that was there, right? You can't keep doing the same thing you've been doing for the last 4 years and expect anything to be any different. So that answer your question? I think there's some -- week 3, day 3, right? So I'd say, early days, but let me put it this way, I wasn't bought here to keep playing the same movie and have the same results.

I have one question. Actually, Skyworks used to reel them for the like RF and wireless companies. And through an acquisition a couple of years ago, you got like analog and power to enter the automotive and the industrial space. But for the automotive and industry, like a lot of big player here is like playing like a total solution card. So basically, I'm thinking like it's kind of become more and more popular for a customer to get the total solutions because the design cycles get shorter and shorter. But compared to Skyworks portfolio, you kind of very, I would say, fragmented. So only have a few products there. So I want to know how do you want to build a synergy in the automotive industry space with your existing product portfolio? You want to like get more probably products from other companies through M&A or what? Or you want to think a different way to pivot to other applications?

So I think your question is, look, we compete in the auto space, in particular, we compete with a lot of bigger companies that have broader portfolios, and there's some argument do they bundle the products or do all these things. I think we have more -- from what I can see, 3 weeks, 3 days in, I don't think we've yet seen that a problem, and that's probably because we're not big enough yet for that to be a problem, right? We can probably grow our auto business. I'm just looking at 200 to 400. I mean we can easily double it and not run into that problem yet, right? Eventually, we probably will because there's a scale there. But we're not yet at a scale where we're running into that, right? And it goes back to if we build great products, then I think we've got an opportunity. So I'm not at the point where I'm worried about that. Is there opportunity to acquire capability in the space? Yes. Are we going to be careful about it? Yes. But I mean, for me, it's -- this is a huge TAM that we haven't even approached. And I'm pretty -- I mean, I like our chances, right? It's early game. I mean I'm not saying we're done yet, but I like our chances. Does that answer your question? Okay.

Revisit the bad neighborhood thing. Because I feel like for a decade, Skyworks did really well and grew and content per phone grew every year. And yes, the concentration weighted on the multiple. And then you had the last 3 years has been really painful for sure. But it seems like the zero-sum part to me feels a little bit negative because it does seem like content is still growing.

Yes. I mean I guess the bad neighborhood -- I'm glad you brought that up. And look, it's the neighborhood we're in. It's competitive, it's challenging. I mean, okay, I mean it's been challenging because we haven't been performing that well. I mean, honestly, if we had been rising our content -- if we've been growing our content and we're at $13 or $14 to $15 per mobile device and growing our -- I mean, stock would be totally different, right? It's a bad neighborhood because we haven't been performing that well in it. And I think, yes, I mean, it goes back to we're trading at a discounted multiple compared to some of our analog RF peers because we do have a customer concentration challenge. But that customer concentration challenge that's a proxy for volatility, right? And they don't -- if we had continued to grow, well, yes, then we wouldn't be in that -- we'd be having a different discussion, right?

Well, it is hard to focus on the broad market business because you said nobody cares about it. I mean, we do care but the variance from quarter-to-quarter is driven by something else. So our questions are all going to be about that.

I understand. That I understand.

I don't want you to think we don't care.

I know. I just kind of made a joke about that.

Yes. Great. Any other questions? Okay. We'll wrap it up there. Thank you very much.

All right. Thank you.