Qorvo Q1 2026 Earnings Report

Qorvo EPS Results

• Actual EPS: $0.92
• Consensus EPS: $0.62
• Beat/Miss: Beat by +$0.30
• One Year Ago EPS: $0.87

Qorvo Revenue Results

• Actual Revenue: $818.80 million
• Expected Revenue: $775.61 million
• Beat/Miss: Beat by +$43.19 million
• YoY Revenue Growth: -7.70%

Qorvo Announcement Details

• Quarter: Q1 2026
• Date: 7/29/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, July 29, 2025
• Conference Call Time: 4:30PM ET

Qorvo (NASDAQ:QRVO) is a leading provider of advanced radio-frequency (RF), analog and mixed-signal semiconductor solutions. The company designs, develops and manufactures a broad portfolio of components and modules that enable wireless and wired connectivity across mobile devices, network infrastructure, defense systems and Internet of Things (IoT) applications.

Qorvo’s product offerings include RF filters, power amplifiers, switches, integrated front-end modules and other custom mixed-signal devices. These technologies support 4G and 5G wireless networks, Wi-Fi, Bluetooth, broadband access and other high-performance communications applications in smartphones, home gateways, small cells, connected vehicles, industrial equipment and aerospace platforms.

Formed in January 2015 through the merger of TriQuint Semiconductor and RF Micro Devices, Qorvo is headquartered in Greensboro, North Carolina. The company is led by President and Chief Executive Officer Robert Bruggeworth and governed by a board of directors with deep expertise in semiconductor design, manufacturing and global markets.

With operations and strategic partnerships across North America, Europe and Asia, Qorvo maintains research and development centers and collaborates with foundries and assembly facilities worldwide. Its global footprint and broad product portfolio position the company to address evolving connectivity needs in consumer electronics, carrier infrastructure, defense and emerging IoT markets.

Qorvo Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q1 FY26 results topped guidance with $819 M in revenue, a 44% non-GAAP gross margin, and $0.92 non-GAAP EPS.
• Positive Sentiment: Q2 outlook raised to $1.025 B ± $50 M in revenue, 48–50% non-GAAP gross margin, and $2.00 ± $0.25 non-GAAP EPS.
• Positive Sentiment: Factory consolidations include closures in Costa Rica and Greensboro plus a new SAW line in Texas, driving annual COGS savings that exceed the $10–20 M startup expense.
• Positive Sentiment: Defense & aerospace backlog climbed above $7 B and Connectivity & Sensors’ UWB funnel surpassed $2 B, underlining robust demand.
• Negative Sentiment: Qorvo plans to exit $150–200 M of low-margin mass-tier Android 5G business in FY26, weighing on ACG segment revenue.

Presentation

[Operator]

Day, and welcome to the Qervo Inc. First Quarter twenty twenty six Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

[Operator]

I would now like to turn the conference over to Douglas Delito, Vice President of Investor Relations. Please go ahead.

[Doug DeLieto, VP - IR at Qorvo]

Thanks very much. Hello, everyone, and welcome to Qorvo's Fiscal twenty twenty first quarter earnings call. This call will include forward looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release published today, as well as the risk factors associated with our business and our annual report on Form 10 ks filed with the SEC, because these risk factors may affect our operations and financial results. In today's release and on today's call, we provide both GAAP and non GAAP financial results.

[Doug DeLieto, VP - IR at Qorvo]

We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non cash expenses or other items that may obscure trends in our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non GAAP results. For a complete reconciliation of GAAP to non GAAP financial measures, please refer to our earnings release issued earlier today available on our Investor Relations website @ir.corvo.com under Financial Releases. Joining us today are Bob Bruggeworth, President and CEO Grant Brown, Chief Financial Officer Dave Fullwood, Senior Vice President of Sales and Marketing Philip Chesley, President of High Performance Analog Eric Crevison, President of our Connectivity and Sensors Group Frank Stewart, President of our Advanced Cellular Group as well as other members of Qorvo's management team. And with that, I'll turn the call over to Bob.

[Robert Bruggeworth, President & CEO at Qorvo]

Thanks, Doug. Welcome, everyone, to our call. Qorvo delivered a strong 2026 with notable achievements across our three operating segments. Beginning with ACG, we continue to leverage the breadth and performance advantages of our cellular product portfolio. For our largest customer, we supply four categories of highly differentiated products.

[Robert Bruggeworth, President & CEO at Qorvo]

They are antenna tuners, high performance filters and switches, integrated modules, and envelope tracking power management. Qorvo's envelope tracking PMIC for this customer has been custom developed to pair with their internal baseband, and this represents a durable multi year content opportunity. In HPA, our growth investments are in defense and aerospace and power management. Defense and aerospace is HPA's largest market by revenue, and we expect durable year over year growth in D and A supported by increases in U. S.

[Robert Bruggeworth, President & CEO at Qorvo]

And allied defense spending. In power management, we are leveraging our leadership in PMICs and motor control to diversify across markets, including consumer, defense and aerospace, industrial and enterprise, and mobile. Growth applications include enterprise and AI data centers, wearables, drones, robotics, smartphones, and advanced power management solutions for AESA radars. In CSG, we supported Wi Fi access points and flagship smartphones with Wi Fi seven front ends, while also aligning with market leading chipset providers to develop next generation solutions for Wi Fi eight. CSG is also leveraging our ultra wideband and matter portfolio to scale new use cases and diversify revenue.

[Robert Bruggeworth, President & CEO at Qorvo]

Ultra wideband is our third largest investment area, providing Qorvo a significant long term opportunity for diversification and growth as applications proliferate. We are engaged broadly across markets and maintain a robust ultra wideband sales funnel with over $2,000,000,000 of qualified opportunities. Now turning to strategic highlights by market. In the automotive market, Qorvo's ultra wideband technology enables a range of automotive use cases, such as secure access using smartphones and smartwatches, in addition to key fobs, as well as precision short range radar applications, including child presence detection, hands free liftgate access, and intrusion detection. During the quarter, Qorvo was awarded an ultra wideband design win for a leading automotive OEM based in Japan and secured an ultra wideband win in support of the world's leading EV manufacturer.

[Robert Bruggeworth, President & CEO at Qorvo]

For automotive asset tracking, we were selected to supply ultra wideband tags for an automotive OEM based in South Korea. These tags enable the OEM to enhance operational efficiencies as cars are manufactured and transported. In consumer markets, we secured a Wi Fi seven design win in augmented reality glasses. This is a growth category, and Qorvo is also supplying Wi Fi six and Wi Fi seven FEMs for a leading supplier of AR glasses and VR goggles to a company headquartered in The U. S.

[Robert Bruggeworth, President & CEO at Qorvo]

During the defense and aerospace markets, Qorvo's opportunity set continues to expand. Our sales funnel increased approximately 2,000,000,000 sequentially to over $7,000,000,000 This growth reflects a sharp increase in both U. S. And international defense spending and Qorvo's expanding position in high priority programs. Recent U.

[Robert Bruggeworth, President & CEO at Qorvo]

S. Budget reconciliation legislation includes approximately $150,000,000,000 in additional U. S. Defense funding. This is an incremental tailwind to revenue given Qorvo's strategic importance to the DoD and leading defense primes.

[Robert Bruggeworth, President & CEO at Qorvo]

We are actively engaged across a broad range of advanced programs, including radar, comms, SATCOM, and missile defense, and we stand to benefit from initiatives such as the Golden Dome multilayer defense system. We are also a beneficiary in increased EU and allied defense funding in ground, airborne, ship, and space based sensing platforms. Purvo is uniquely positioned in this market. We offer gas, GaN, BAW, SAW, and advanced multi chip packaging, all manufactured onshore in The US. These capabilities, coupled with our silicon beamforming technology, are critical enablers for modernizing defense platforms.

[Robert Bruggeworth, President & CEO at Qorvo]

By integrating these core technologies, Qorvo is able to enhance system level performance, reduce size and weight, and deliver greater value across increasingly complex architectures. During the quarter, we supported a broad range of mission critical applications, including manned and unmanned airborne radar, space based radar, SATCOM, electronic warfare, and missile defense. To address increasing requirements for functional density and efficiency, we introduced two highly integrated S band switch filter bank modules, leveraging BAW and SOI technologies. Additionally, we expanded our SATCOM portfolio with a new GaN based K band power amplifier that delivers superior levels of integration, bandwidth, and power efficiency to meet the needs of next generation LEO constellations. In industrial and enterprise markets, Qorvo enabled the demonstration of breakthrough new enterprise networking applications with a leading Tier one equipment manufacturer.

[Robert Bruggeworth, President & CEO at Qorvo]

We've engaged with this customer and other Tier one equipment manufacturers for a number of years to incorporate Qorvo's ultra wideband solutions into their network access points. These access points have already begun to shift to end customers as part of their Wi Fi seven deployments. This enables a range of ultra precise applications such as indoor navigation, location awareness, and asset tracking that deliver superior real time location accuracy in high density venues such as factories, warehouses, offices, airports, hospitals, campuses, retail locations, and stadiums. In addition to this ultra wideband engagement, Qorvo supports this customer's enterprise ecosystem with Wi Fi seven front end and filtering solutions. Turning to infrastructure, there's strong momentum in DOCSIS four point zero broadband cable access.

[Robert Bruggeworth, President & CEO at Qorvo]

Qorvo is a market leader, and we are well aligned with industry leaders in the continuing evolution of DOCSIS standards and capabilities. During the June, we released two new GaN based power doubler amplifiers supporting the industry's transition to more intelligent and adaptive hybrid fiber coax systems. For the base station market, we sampled key customers' new solutions, including high efficiency pre driver and high rejection BAW filter. Qorvo's newest small signal solutions offer higher performance and tighter integration for massive MIMO, fixed wireless access and other five gs deployments. In the mobile market, we are investing to increase our content opportunity at our largest customer in future programs over multiple years.

[Robert Bruggeworth, President & CEO at Qorvo]

We've expanded our portfolio for this customer with ET power management, and we expect to achieve greater than 10% contact growth in this year's fall launch compared to last year's fall launch. At our second largest customer, our solutions span our smartphone portfolio. Content this year includes low band pads, mid high band pads, and ultra high band pads, as well as mid high secondary transmit, antenna tuning, discrete filters, and Wi Fi seven FEMs. We also supported the ramp of multiple smartphone models by an Android OEM based in North America. Qorvo supports this customer with multiple high value placements across product categories.

[Robert Bruggeworth, President & CEO at Qorvo]

For Android OEMs based in China, shipments increased sequentially during the quarter as expected and in line with seasonal ramp profile of five gs smartphones. We continue to supply mid tier design wins awarded prior to our pivot from lower margin Android five gs. However, five gs product development in ACG now targets the premium and flagship tiers. During the quarter, we secured multiple Wi Fi seven design wins across leading Android smartphone OEMs using MediaTek's Dimensity chipset. These wins are concentrated in the flagship and premium tiers, and we are engaged to support Wi Fi eight deployments in the upper tiers of the Android smartphones as early as the 2026.

[Robert Bruggeworth, President & CEO at Qorvo]

Looking across our operating segments, we're expanding our content opportunity in ACG with our largest customer, while diversifying across markets, customers, and product categories in HBA and CSG. We are operating the business with discipline and continue to evaluate opportunities to optimize costs. Where businesses do not meet our financial or strategic objectives, we will continue to act decisively, whether through divestiture or exit, to focus our resources on core high performing areas. Since last year, we have exited base station PAMs, divested our silicon carbide business, pivoted from legacy Android programs, ramped higher value product categories, begun a sales process related to our MEMS Force Sensing business, and pursued a broad set of actions to optimize our global factory network. Most recently, we transitioned gas wafer production from our Greensboro, North Carolina fab to our Hillsboro, Oregon fab.

[Robert Bruggeworth, President & CEO at Qorvo]

On last quarter's call, we announced our intent to close our facility in Costa Rica. The closure is on track and will occur in 2026, providing an additional tailwind to margin when complete. To build on this, today we are announcing the closure of our Greensboro fab and transfer of our saw filter production to our Richardson, Texas fab. In his remarks, Grant will provide additional information on this, including timing and savings. We want to thank all the employees who are supporting us through this closure to make sure it's a seamless transition for our customers. And with that, I'll turn it over to Grant.

[Grant Brown, SVP & CFO at Qorvo]

Thanks, Bob, and good afternoon, everyone. Qorvo's fiscal first quarter revenue of $819,000,000 non GAAP gross margin of 44% and non GAAP diluted earnings of $0.92 per share all compared favorably to guidance. During the quarter, our largest customer represented approximately 41% of revenue. On the balance sheet, as of quarter end, we held approximately $1,200,000,000 in cash and equivalents.

[Grant Brown, SVP & CFO at Qorvo]

We currently have approximately $1,500,000,000 of long term debt outstanding and no near term maturities. We ended the quarter with a net inventory balance of $638,000,000 This represents a slight sequential reduction and a decrease of $89,000,000 on a year over year basis. During the quarter, we generated operating cash flow of approximately $183,000,000 and incurred $38,000,000 of CapEx, which resulted in free cash flow of $145,000,000 From an operational perspective, the closure of our Costa Rica site remains on track and we anticipate a smooth transition. We continue to expect this action will be completed early next calendar year as we move production and complete the sale of the facilities. As Bob mentioned, we have also decided to close our manufacturing facility in North Carolina to further consolidate our internal factory footprint.

[Grant Brown, SVP & CFO at Qorvo]

The closure of a wafer fab requires more time than the closure of a packaging, assembly and test location, and we currently expect the associated cost efficiencies to benefit non GAAP gross margin beginning late in fiscal twenty twenty seven. In order to transfer our soft filter production out of North Carolina, we have begun to bring up a new production line in our Texas location and we'll be working closely with customers to ensure a seamless transition. For modeling purposes, shutdown and restructuring activities such as those related to the closure of our North Carolina and Costa Rica sites are excluded from non GAAP results. Conversely, the operating expenses associated with bringing up a new line as is the case with the SAW line in Texas are included in non GAAP results. In fiscal twenty twenty six, we expect non GAAP OpEx related to the startup costs for the Texas SAW line of 10,000,000 to $20,000,000 with minimal expense continuing into fiscal twenty twenty seven.

[Grant Brown, SVP & CFO at Qorvo]

Subject to factory volume and mix, we expect the annual savings in non GAAP COGS for each year after the new line goes live will exceed the one time startup costs incurred in fiscal twenty twenty six. Regarding our outlook for fiscal Q2, our guidance reflects strong execution and demand across multiple end markets, while factoring in our current views on macroeconomic and geopolitical dynamics. Our expectations for the September are as follows: revenue of $1,025,000,000 plus or minus $50,000,000 non GAAP gross margin between 4850% and non GAAP diluted EPS of $2 plus or minus $0.25 The momentum we are seeing in both revenue and bookings is being driven primarily by robust underlying demand and meaningful content expansion. At our largest customer, we continue to benefit from strong unit volumes across the existing platforms and more than 10% year over year content growth on the ramping platform. Growth in our Defense and Aerospace business is supported by increasing content and rising defense spending, both domestically and internationally.

[Grant Brown, SVP & CFO at Qorvo]

Additionally, our infrastructure business is benefiting from the industry's transition to DOCSIS four point zero, where Qorvo is a leading supplier of broadband amplifiers. These drivers are being partially offset as we continue to shift away from lower margin mass tier Android five gs business, which is proceeding as planned. In the June, ACG's Android revenue declined 18% year over year to approximately $240,000,000 with China based Android revenue down 29% year over year to just under $100,000,000 While we've seen limited tariff related inventory buffering at a few customers, we believe these effects are modest and secondary to the underlying demand drivers and Qorvo specific content growth reflected in our outlook. Gross margin continues to improve on a year over year basis. Q1 non GAAP gross margin increased approximately 300 basis points versus last fiscal year and Q2 non GAAP gross margin is expected to increase 200 basis points versus last fiscal year at the midpoint.

[Grant Brown, SVP & CFO at Qorvo]

This improvement is a direct result of multiple initiatives. We've actively managed our product portfolio and pricing strategies to reduce our exposure to mass tier Android five gs. We have positioned the company to benefit from growth in DNA, which is margin accretive given the high mix, low volume nature of the business. We've divested or exited margin dilutive businesses. And finally, we continue to manage manufacturing costs aggressively while consolidating our factory footprint.

[Grant Brown, SVP & CFO at Qorvo]

We project non GAAP operating expenses in the September to be approximately $265,000,000 plus or minus 3%. The sequential increase in OpEx reflects higher incentive based compensation given the expected outperformance during the first half of the fiscal year, FX headwinds related to the weak U. S. Dollar and the impact of tariffs. Total OpEx also includes other operating expense of $5,000,000 associated with the startup of our soft filter line in Texas among other items.

[Grant Brown, SVP & CFO at Qorvo]

Below the operating income line, non operating expense is expected to be approximately $10,000,000 reflecting interest paid on our fixed rate debt, offset by interest income earned on our cash balances, FX gains or losses along with other items. Our non GAAP tax rate for fiscal twenty twenty six is now expected to be approximately 15%. This is down from between 18% to 19% as was previously communicated. We continue to monitor the situation as the specific implementation of the new tax bill in The U. S.

[Grant Brown, SVP & CFO at Qorvo]

As well as changes to international tax policy may evolve over time. On the corporate development front, we continue to seek strategic alternatives for our MEMS Force Sensing business, which is incurring approximately $5,000,000 of non GAAP OpEx per quarter. We remain committed to optimizing our portfolio and regularly evaluating each of our investment areas. We're confident the steps we're taking today across our product portfolio, business segments and manufacturing footprint position the company to expand profitability. The benefits of these strategic initiatives will continue to become evident as we advance through fiscal twenty twenty six and into fiscal twenty twenty seven.

[Grant Brown, SVP & CFO at Qorvo]

At this time, please open the line for questions. Thank you.

[Operator]

Thank you. We will now begin the question and answer session. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. Please limit yourself to one question and one follow-up question. If you have further questions, you may reenter the question queue.

[Operator]

The first question comes from Thomas O'Malley with Barclays. Please go ahead.

[Thomas O'Malley, Director - Equity Research at Barclays]

Hey, guys. Thanks for taking my question and nice results. So I just want to start off with the seasonality of this year. It looks like things are tracking kind of relatively in line with 2024 in the June quarter. You look at the remainder of the year, you guys had previously kind of talked about the largest customer kind of being flat to slightly up modestly, but you're kind of reiterating this view that there's double digit growth in content fall launch over fall launch.

[Thomas O'Malley, Director - Equity Research at Barclays]

Could you talk about the disconnect there? And is December kind of normal seasonal, which gets you to that kind of goal? Just help me understand the seasonality as it compares to last year, just given the strong content up year over year. Thank you.

[Grant Brown, SVP & CFO at Qorvo]

Hey, Tom, this is Grant. Thank you for the question. Let me start off maybe just with the December question and then I'll get to the full year. In December, typically seasonality would show that we ship a little bit earlier into the fall ramp. So we would generally see a September quarter that's slightly higher than December.

[Grant Brown, SVP & CFO at Qorvo]

There's no change this year to what we believe the ramp profile would look like. Again, it really depends on how things play out unit wise, but in terms of the full fiscal twenty six year, the last time we provided a full year guidance was in January and that was prior to the increase in any macroeconomic uncertainty around the tariff dynamics. At that time, January forecast called for 2026 revenue to be roughly flat with fiscal twenty twenty five, excluding the $30,000,000 of revenue from silicon carbide, we've since divested that was in fiscal twenty twenty five. At this time, we're not updating our full year at this stage, but I can walk through some puts and takes by business segment beyond just ACG. But in ACG, outlook is still for a single digit decline and that's unchanged.

[Grant Brown, SVP & CFO at Qorvo]

We remain on track to exit the 150,000,000 to $200,000,000 of low margin business as part of our strategic portfolio shift there in Android five gs. And we currently expect about two thirds of that year over year decline in the Android business will occur in the 2025. So that's yet to come in the second half, which gets to at least partially addressing your December question. Largest At customer, we remain encouraged by the recent strength and we're seeing unit volumes there on existing platforms come in to our expectations and strong as well as the content gain that we see of 10% or more on the ramping platform, which is encouraging. In some of the changes we've seen in terms of the top line for fiscal twenty twenty six are in CSG, which is trending below our earlier expectations due in part to automotive customer delaying a program ramp there that included our ultra wideband SoC.

[Grant Brown, SVP & CFO at Qorvo]

That program is now anticipated to ramp in fiscal twenty twenty seven. So we continue to expect year over year growth for CSG. However, it'll be in the low single digits versus 10% to 12% as we guided previously. And then lastly, our expectations for HPA remain unchanged and on track for a strong double digit growth this year. In D and A, rebound in infrastructure tied to the DOCSIS upgrades and some other positive tailwinds we can get into.

[Grant Brown, SVP & CFO at Qorvo]

While we're encouraged by the first half strength that we've seen, we're also mindful of the seasonality in smartphones in the back half as we shift the portfolio away from mass tier Android, but overall, we remain very confident in the strategy, the execution our strong strategic position.

[Thomas O'Malley, Director - Equity Research at Barclays]

Super helpful. Thank you. And then just to dive down onto the Android point there. So you gave a little extra color this quarter, talking about Android and like the $240,000,000 range. That's up 16% sequentially by my numbers, maybe give or take where people have March set up.

[Thomas O'Malley, Director - Equity Research at Barclays]

But, you guys have previously said kind of up slightly. Is that dynamic something that you think is more of a pull forward? Or do you think that's customers kind of coming to you, hey, you're exiting the business. This is the end of the life here. We want to take a couple more products before you're done producing. Just maybe explain the dynamic there and what happened versus your original expectations.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

This is Dave. I'll take that one. So yeah, I mean, you look at the Android ecosystem, we've customers in China as well as globally and in the premium tier, remember we're not exiting that part of the market. So we talked I think last time about some share gains that we have in the second half at our large Korean customer. And so we're starting to see the benefit of that as that starts to ramp up.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

We've also got really good content in a U. S. Customer that Bob mentioned in his prepared remarks, And that's ramping now as well. So I think that's some of the dynamics you're seeing. We talked about China a little bit earlier and we do see a little bit of buffering probably there with some of the uncertainty in the trade dynamics.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

And so there's probably a little bit of that going on in China. But we've still got engagements there in the high tier, but that business is definitely declining as we head into the back half of the year.

[Operator]

Thank you. The next question is from Harsh Kumar with Piper Sandler. Please go ahead.

[Harsh Kumar, MD & Senior Research Analyst at Piper Sandler Companies]

Hey, guys. Also wanted to echo my congratulations. These are extremely great and awesome results. I had two as well. I think you're moving to the 50% or 48 to 50% gross margin mark a lot faster than I think I had anticipated personally.

[Harsh Kumar, MD & Senior Research Analyst at Piper Sandler Companies]

And I was curious, you've got a bunch of things going on. You're exiting businesses. You're doing fab rationalization. But but if you were to say which of those initiatives have probably the maximum amount of swing factor that's driving your margins up so much higher, Maybe I'll be very curious to understand what's making the margins go up so much faster if there's one that's more impactful than the other? And I've got a follow-up.

[Grant Brown, SVP & CFO at Qorvo]

Sure, Harsh. Thanks for the question. If you look at gross margin, at least in Q1, the driver there sequentially is largely mixed, but on a year over year basis, it's up largely due to cost improvements. You'll see that we've taken some significant actions on the factory footprint, some of yet to come, but a number of them in terms of reducing costs, you're starting to see in gross margin. There's also an improvement in mix.

[Grant Brown, SVP & CFO at Qorvo]

We've seen growth in the defense and aerospace area, which helps from a business mix perspective. And we've also exited the silicon carbide business, which was dragging against our gross margin profile. And finally, we've moved our WiFi business from an underloaded North Carolina fab to an Oregon fab that's higher volumes and we're seeing a benefit there. So I would say that the single largest theme in terms of gross margin improvement is both cost reductions and the other actions we've taken.

[Harsh Kumar, MD & Senior Research Analyst at Piper Sandler Companies]

Okay, and I assume that applies to September as well?

[Grant Brown, SVP & CFO at Qorvo]

Yes, that's a continuation a lot of the same trends.

[Harsh Kumar, MD & Senior Research Analyst at Piper Sandler Companies]

Got it. And then for my follow-up, you talked a lot about increased content, but you're seeing on the internal modem, but I wanted to ask about the mid high pad. I believe you are a legit supplier in the Android ecosystem of that pad. And I think from my understanding, you have a window at a large US customer. Is am I to assume with the kind of growth that you're talking about in your in your content that you have a shot at it or you won something or maybe there's contribution there or is it just the internal modem proliferating through the ecosystem of phone models?

[Robert Bruggeworth, President & CEO at Qorvo]

Harsh, this is Bob. I'll take that. So for this fall's launch, the team did a great job of delivering dollar content growth that both Grant and I talked about over 10%. But as far as next year's phone, which is where I think you're heading, we do remain confident in our position with our largest customer. But there are two factors that we consider when we look at the business there.

[Robert Bruggeworth, President & CEO at Qorvo]

One is tech, but one is commercial. In terms of technical, the technology that we're delivering and our product development we've done, we're delivering results and we're laser focused on an execution. So I like how the team is progressing there. Commercially, with the expiration of a certain long term supply agreement, that's also helping us. And as we've looked and we've talked about this before, the expansion of their SKUs where they launched the 16E, which to your point, we did have ET PMIC on the internal modem, these all create opportunities for us.

[Robert Bruggeworth, President & CEO at Qorvo]

So we think we positioned the business nicely, but we'll see how it all plays out next year.

[Operator]

Our next question is from Christopher Rolland with Susquehanna. Please go ahead.

[Christopher Rolland, Senior Equity Analyst - Semiconducters at SIG Group]

Hey, thanks for the question and really great results here. So I guess first of all, following up on the gross margin progress, so this is probably for Grant here. So you guys did mention you could hit high 40s this year and you're going to do that, looks like, but you mentioned you could hit 50% next year. I was wondering if maybe we could get an update there. And as we look forward into next year, perhaps you can walk us, give us a gross margin walk, what's contributing to what in terms of that improvement? Thanks.

[Grant Brown, SVP & CFO at Qorvo]

Sure, Chris. This is Grant. Let take that one. As we look forward beyond fiscal twenty twenty six, they're largely the initiatives that we've discussed, the Costa Rica and North Carolina closures and we'll be moving into fabs that will be more heavily loaded. So that'll be beneficial.

[Grant Brown, SVP & CFO at Qorvo]

We'll be changing the business mix and we'll have growth in D and A above our corporate average. So that'll be margin accretive. We're laser focused on reducing costs. It's an ongoing activity and we'll be able to benefit from that. But in terms of giving any guidance out into fiscal twenty twenty seven, other than to say we expect gross margin to continue to improve, I won't be providing any incremental guidance today.

[Grant Brown, SVP & CFO at Qorvo]

In terms of walking the overall fiscal 'twenty six improvement, the vast majority of it, as I mentioned, was really cost related and due to the factory actions that we had taken previously. There is some inventory improvement there, better excess obsolete, better quality and yields, other items, but for the most part, the lion's share of the improvement is a direct result of those factory and actions and business growth we're seeing in margin accretive areas because of the capital we're allocating to those businesses.

[Christopher Rolland, Senior Equity Analyst - Semiconducters at SIG Group]

Okay, thank you for that. Just a clarification and then another question, I apologize. But it sounds like it's like $15,000,000 a year, if I got that right from those fab rationalizations there, which is a little under 1%, if you just confirm that I got that math right. And then the second question is actually for Bob. So Bob, you did better than expected for June and September, it seems like here.

[Christopher Rolland, Senior Equity Analyst - Semiconducters at SIG Group]

Any idea on how much, particularly your largest customer, was pulled in? And Qualcomm has talked about an expectation of 30% internal modem at your largest customer. Is that your expectation as well in the September guidance? Thank you.

[Grant Brown, SVP & CFO at Qorvo]

Maybe let me start Chris with the first part of your question and then I'll let Dave or Bob respond. The $15,000,000 would be relevant for the North Carolina We said it'd be between 10,000,000 and $20,000,000 of cost in fiscal twenty twenty six in order to bring up the saw line in our Texas location and that we would benefit at least that much every year thereafter once the line goes live. So I would say that's on the low side and likely related simply to the North Carolina facility.

[Robert Bruggeworth, President & CEO at Qorvo]

And Chris, as far as architecture is doing, our largest customer will stick with our standard line though, we're not going to comment on that. But clearly, is our expectations over time that they will use more of their internal modem and the percentage will only grow. Dave, you want to take the other part he asked?

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

Yes, sure. Hey, Chris. Yes, as far as your question about pooling demand, I mean the strength we're seeing is primarily driven by the underlying demand fundamentals we mentioned in the prepared remarks around unit strength and content gains and smartphones as well as increased spending and expanding content and defense and the broadband infrastructure upgrades. So those are the major drivers. Outside of handsets, we're not seeing any pull in activity, channel inventories are healthy and customer behavior supports normal demand patterns.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

In fact, some areas we're seeing the opposite that we do believe is related to tariffs and especially our motor control business for power tools and garden equipment. We're starting to demand push out just because of the uncertainty around the tariffs and trade policy concerns there. In handsets, we're benefiting from the seasonal ramp we talked about and further supported by some of the content gains, not only our largest customer, but mentioned Samsung as well and others. But we have seen some limited component inventory buffering due to the tariff dynamics, mostly in Android and some of that's associated with factory optimization as our customers try and optimize their factory footprints to the different geographies they're shipping to. So we estimate that to be in the range of about 15,000,000 to $30,000,000 of added buffer that could be out there and we expect that will be reduced back down to normal throughout the rest of the calendar year.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

Having said that, we're projecting our China Android business will be down sequentially about 30,000,000 to $40,000,000 in this quarter and then down again in our fiscal Q3. So all of that's contemplated in our guidance. And we continue to monitor these dynamics closely and we're going to continue to take disciplined and conservative approach to the back half of the fiscal year. And I just do want to point out we haven't changed our internal smartphone unit assumptions that we started the year with. So we're kind of maintaining our position there as well.

[Operator]

Our next question is from Jim Schneider with Goldman Sachs. Please go ahead.

[James Schneider, Analyst at Goldman Sachs]

Good afternoon. Thanks for taking my question. I was wondering if you could maybe comment a little bit on the defense business. Clearly, it seems like it's tracking a little bit better than what you expected. Can you maybe talk about whether the step down was less than you expected in the quarter?

[James Schneider, Analyst at Goldman Sachs]

How much you expect the defense vertical to be up specifically in September? And then maybe as a separate follow on, can you maybe sort of address the M and A potential specifically in that defense area that you see out there in the market? Do you see more or less opportunities in that vertical? And maybe kind of talk about the price or valuation environment you see for both defense and broader HPA acquisitions. Thank you.

[Grant Brown, SVP & CFO at Qorvo]

Sure, why don't we let Philip, you want to cover the business and then I can talk to the M and A environment?

[Philip Chesley, SVP & President of High Performance Analog at Qorvo]

Yeah, sure. So I think the strength that we're seeing is not, I mean, it's not different than what we had forecasted. You know, I think as Bob mentioned, you know, we're seeing really just our design opportunities and our funnel grow significantly. Think Bob mentioned that we had increased it by over $2,000,000,000 in a quarter. You know, are really critical in most comm radar satellite, Satcom systems with the US government. And I think you know what we're seeing is, you know, when the administration first came in, there was a lot of executive orders.

[Philip Chesley, SVP & President of High Performance Analog at Qorvo]

And I think it took some time for our customers to kind of digest that and understand kind of what the priorities are. I think as that is starting to become understood what the priorities are and kind of figuring out where things are going, you know, we're seeing that as a tailwind in the near term as well. So I think, you know, we, whether it's a radar platform, whether it's a drone, whether it is, you know, a satellite, there's just a tremendous amount of opportunity in front of us. And, you know, I think we're well positioned to get our unfair share.

[Grant Brown, SVP & CFO at Qorvo]

Maybe on the M and A front, the DNA space remains a very attractive area for us fill this point, our strength there with customers and other technologies could lead us to be a better owner of certain businesses. And so we're actively looking in that space. It's generally margin accretive for us, and where the valuations make sense, and there's a strategic merit for the transaction where we are expecting to be active. Beyond that, it's a typical deployment of our cash to return value to shareholders in disciplined manner.

[James Schneider, Analyst at Goldman Sachs]

Thank you.

[Operator]

Thank you. Our next question is from Joe Moore with Morgan Stanley. Please go ahead.

[Joseph Moore, Managing Director at Morgan Stanley]

Great. Thank you. In terms of the tariff related kind of buffering, I guess, why isn't there more of that? I would feel like given the dynamic of kind of shifting tariff potential, it would just behoove people to have a little bit more inventory. I guess, what are those conversations like?

[Joseph Moore, Managing Director at Morgan Stanley]

And is there any kind of pushback on you from your customers saying, we need to pass along component savings to mitigate this, any price pressure or anything you might see from that?

[Grant Brown, SVP & CFO at Qorvo]

It's difficult to precisely isolate it, right? Especially as you're coming off of a new seasonal pattern in our largest customer and with the launch of the spring model that included our ET PMIC, which was new content and we're in the early stages of a fall ramp where we've achieved greater than 10% content gains, which is new as well. So given the preliminary sell through data we're seeing, most of the strength that we're seeing aligns with the phones that are being purchased, whether it's third party data or the carriers themselves. But I don't know if

[Robert Bruggeworth, President & CEO at Qorvo]

The only thing I would say add to that is, the only area we're seeing the tariffs impact, as Dave mentioned, is the battery operated power tools. That's the one area clearly we've seen it where it's not even buffering. They're just holding off on their production plans to figure out where they're going to make things around the world until they understand what the tariffs are going to be. But as for the other parts of our business, large defense obviously doesn't matter. We're not seeing it in other areas.

[Robert Bruggeworth, President & CEO at Qorvo]

The only area primarily is in the battery operated power tools area.

[Joseph Moore, Managing Director at Morgan Stanley]

That's helpful. Thank you. And then as my follow-up, you mentioned CSG kind of delay and a little bit lower full year. Is there anything we should be aware of there in terms of how to model the rest of the year? Is there a discrete fall off or is that just something that just ramps a little later than you would thought?

[Grant Brown, SVP & CFO at Qorvo]

It's something that will affect the top line there. In terms of the growth for the year, like I said, it would be in the single digits versus the kind of low double digits as we had communicated in the past. That would have been something that would have happened later in the year, so it's pushing to fiscal twenty twenty seven. As you think about that business, it's really the combination of our Wi Fi business and our SoC business. As Bob pointed out, our SOC business is the third largest investment next to our mobile business initiatives and our DNA franchise.

[Grant Brown, SVP & CFO at Qorvo]

The SOC business within CSG is generating annual revenues right now of around $60,000,000 So the push out is meaningful as you think about that particular business, and it's incurring around $100,000,000 of OpEx. This is a meaningful shift for the CSG segment under the Qorvo consolidated results.

[Operator]

Our next question comes from Krish Sankar with Cowen and Company. Please go ahead.

[Krish Sankar, Managing Director at TD Cowen]

Yeah. Hi. Thanks for taking my question. I two of them. First one is kind of a clarification.

[Krish Sankar, Managing Director at TD Cowen]

On the pull ins, is the pull ins mainly in June, or are you also seeing pull ins in the September? And within that, among your largest customer, how much of the current generation RF and power products are common or shared with the 2026 model? And then I had a longer term question for Bob after that.

[Grant Brown, SVP & CFO at Qorvo]

Sure. So in recent to quantify it, David already said earlier that we were expecting maybe 15,000,000 to $30,000,000 that we would expect to see and that's all incorporated in our guidance. So the unwinding of that in our September and throughout the rest of the year is all contemplated in what we've been talking about today. If there's anything more to add or you can ask Bob your second question.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

Yeah, and what Grant referred to and I'm answering that's our component inventory. From everything we can see that what we're shipping is being built and sold through. So that 15,000,000 to 30,000,000 we're talking about is just some buffering that we've seen around our component inventory, mostly in China, but in other areas as well as customers optimize their factories and maybe in response to tariffs or other reasons as they move production from one factory to another.

[Krish Sankar, Managing Director at TD Cowen]

Got it. Got it. And then just like a longer term question for Bob. Bob, kind of curious your thoughts on edge AI implications for smartphones and RF. It seems like there's, like, you know, from a RF standpoint, you need more uplink MIMO capability and also, I mean, my the phones need to be upgraded to power class two for Edge AI situation, which could happen as early as 2026.

[Krish Sankar, Managing Director at TD Cowen]

For launch, I'm very curious your view on Edge AI and what it implies for out of content on a go forward basis.

[Robert Bruggeworth, President & CEO at Qorvo]

Thanks for your question. I think you're correct that we are going to need more and better RF. That's something we say all the time. Frank, I think you can handle that question. We've had a lot of discussions about exactly those things.

[Robert Bruggeworth, President & CEO at Qorvo]

We're not so much hung up on is it being driven by AI. It's just always the carriers want to get people on and off the network faster, particularly as you continue to load more and more data. Whether it's being driven by AI or not, that's secondary to us. What we're focused on is how they keep changing the architectures to drive more and better RF. So Frank, you want to handle that?

[Frank Stewart, SVP & President of Advanced Cellular at Qorvo]

Yes. No, it was a great question and simply stated, yes, I agree with you. If we take you all the way back to our Analyst Day, we talked about five gs Advanced as something that was going to continue to drive RF content, more and better RF in the phone. And a few of the examples we referenced were exactly things that you highlighted, additional both downlink and uplink RF pass in the phone and an increase in power levels in multiple bands, therefore, expanding the power class two levels from just one or two bands to multiple bands in the phone. So, yeah, I think I think you hit, hit on exactly what we expect to see over the next few years.

[Operator]

Thank you. Our next question is from Gary Mobley with Loop Capital. Please go ahead.

[Gary Mobley, MD & Senior Equity Analyst at Loop Capital]

Hey, guys. Thanks for taking my question. I wanted to respectfully push back on some of the guidance you're giving for fiscal year twenty six. Essentially, you're upsizing fiscal year twenty six or at least the first half by about $100,000,000 versus your prior soft views or hard views. And that's the difference between having revenue flat for the year or growing 3%, but yet you're saying only 15,000,000 to $30,000,000 of that upside is coming from pull forward.

[Gary Mobley, MD & Senior Equity Analyst at Loop Capital]

So is this a situation where the year is off to a great start, but it's just too early to upsize your fiscal year twenty six outlook? Or is this really a deep rooted concern about tariff pull forwards?

[Grant Brown, SVP & CFO at Qorvo]

Hey, Gary, this is Grant. Let me try to take a stab at your question. I mean, generally speaking, as we said, there's 's upside in demand that's broad based. It's not just smartphones, we're seeing it in our growth in our DNA business. And then for the full year, talked about some of the puts and takes by business segment.

[Grant Brown, SVP & CFO at Qorvo]

So we're seeing a push out of some revenue for CSG into fiscal twenty twenty seven because of the large automotive program there, which changes the full year. We're seeing a two thirds of our 150,000,000 to $200,000,000 of our Android business that we expect to decline in fiscal twenty six will also hit the second half. And then on top of that, we do have the overhang of macroeconomic uncertainty. The combination of all these factors are leading to our internal views on the full year and why we're not providing an update to our early comments in January.

[Gary Mobley, MD & Senior Equity Analyst at Loop Capital]

Got it. Thanks, Grant. And just my follow-up. I wanted to ask about the practicality of separating ACG from the RF businesses of HPA and CSG. How much how tight is coupling from an R and D or from a manufacturing perspective are all three of those businesses on the RF side?

[Grant Brown, SVP & CFO at Qorvo]

Sure. So I'll take a first pass and then I'm sure Bob and Philip would want to weigh in as well. The businesses themselves are rather tightly coupled. They share factories, that share process engineering, they share product development in certain cases. There are BAW filters, for example, applications that are also used in Wi Fi applications for CSG.

[Grant Brown, SVP & CFO at Qorvo]

There is a significant amount of overhead that's the same across the different businesses. And in fact, there's a lot of learning that happens, whether it's base stations to the smartphones themselves or just customers that are shared, for instance, mobile customers across CSG and ACG, for example. So there is a considerable amount of shared resources amongst all the businesses. It's also true that commercially our defense businesses appreciate our defense customers anyway appreciate the scale that we have from the size of our high volume factories that are serving our mobile customers and vice versa, our mobile customers appreciate the commitment we have to our production lines and the technology advancements and the diversity of our revenue stability that comes along with the DNA business and other areas. There's a lot of shared resources and shared positive sentiment amongst the customers across the businesses.

[Robert Bruggeworth, President & CEO at Qorvo]

Only thing I'll add Grant is they all use the same Oregon Hillsboro fab for gas, all three business units.

[Operator]

Thank you. Our next question is from Chris Cassel with Wolfe Research. Please go ahead.

[Chris Caso, Managing Director at Wolfe Research LLC]

Yes. Hi. I guess the first question, just a clarification of, know, sort of what the, what the Android business looks like exiting the fiscal year, given all you said. And I think what my interpretation is, you'd be sort of a China Android of about maybe twenty to thirty million exiting the year, but I guess I'm not sure if that's complicated by some of the inventory buffering. If you could clarify kind of where you think China Android is at the end of the year.

[Grant Brown, SVP & CFO at Qorvo]

I think maybe just a clarification, Chris, on your question. Did you say exiting the year 20,000,000 to $30,000,000 of Android based China business?

[Chris Caso, Managing Director at Wolfe Research LLC]

Yes.

[Grant Brown, SVP & CFO at Qorvo]

Okay. I think that's on the low end. There's still a bifurcation of their product portfolio.

[Grant Brown, SVP & CFO at Qorvo]

They have flagship and premium tier devices and we'll still look to participate in those. The customers will make their own cost and performance trade offs amongst the parts, but they'll still need to remain competitive if they want to feel the device that's going to sell well and consequently will be able to sell into the higher end of their portfolios. It won't be in the likely in the 20,000,000 to $30,000,000 range. It will probably be higher than that, but the trend is down over time as we continue to execute on our pricing strategies and move forward. As we've commented on this last quarter, our China based Android revenue was just under $100,000,000 and it'll be trending lower over time.

[Chris Caso, Managing Director at Wolfe Research LLC]

Got it. Okay, that's helpful to calibrate us. A follow-up question was on Samsung, and there's two dynamics there because I think you're also exiting some of the mid range there, but you're still focused on the high end. I guess two questions there is, as you look into next year, given the exit, the mid range, some of the gains in the high end, what do you think happens to the Samsung business there? And then secondly, in the event that Samsung is more successful with their internal chipset, which they're trying again on that, is that a benefit for Qorvo content?

[Robert Bruggeworth, President & CEO at Qorvo]

I'd be glad to take the second part. The answer is yes. We would love for them to be successful with their internal baseband. Yeah. You're right. Across business units, not just ACG.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

Yeah. And you're right about exiting the mass here or there as well. It takes longer. The design cycles are longer, sometimes they use things for multiple generations. So you can kind of think of it very similar to how our China business is, but further out in time.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

And so we've got some strong business still remaining there in the mass tier as well as some of the flagship I talked about. So that'll kind of continue on and it'll be about a year probably behind the China business. And as we look forward to the we talked a little bit about our success in the second half flagship. As we as we look forward in the first half flagship next year, we do expect that our content will probably decline there. They're not introducing a new technology from an RF standpoint.

[Dave Fullwood, SVP - Sales and Marketing at Qorvo]

And so you know, the opportunity there for more competition to come And so we'll probably you'll probably see some decline in our content on the spring model.

[Operator]

Thank you. Our next question is from Karl Ackerman with BNP Paribas. Please go ahead.

[Karl Ackerman, MD - Equity Research, Semiconductors & IT Hardware at BNP Paribas]

Yes. Thank you. With the SAW line moving your Richardson facility, which follows the consolidation of your Farmers Branch facility into that business into that fab two years ago, I guess, you at or near full utilization in the Richardson facility? And then at what point do need to significantly add capacity here as we think about the free cash flow generation of this business? And I have a follow-up, please.

[Grant Brown, SVP & CFO at Qorvo]

Sure, Karl, this is Grant. No, we have room there in our Richardson facility to expand and add the saw line. We've improved the die size and overall device size of a number of our products over the years meaningfully and that effectively increases your capacity as you don't have to run as many wafers to produce more dye that are smaller. So we've been very successful at the dye size reductions again, other device reductions in order to accommodate all of the BAW filter production that moved in from Farmers Branch as well as the projected saw demand that we will move there from our North Carolina facility.

[Karl Ackerman, MD - Equity Research, Semiconductors & IT Hardware at BNP Paribas]

Got it. Thanks for that. Yeah, if I could just go back to, I think Gary's question a bit, given there seems to be no change in your smartphone unit assumption this year, I think they're pretty consistent about double digit content gain as your largest customer. There doesn't appear any clear signs of tariff pull ins and believe this, the Android headwind of roughly 150,000,000 also consistent, so I suppose barring macro uncertainty and maybe some push out of CSG from automotive, those seem to be the two primary variables that would dictate whether we would move from what was the initial outlook of flat year over year growth or are there any other mechanics that we should consider when thinking about the growth rate for this year? Thank you.

[Grant Brown, SVP & CFO at Qorvo]

No, I think you're considering everything that we've said. Look, we could be wrong if we're overly conservative. We'll see how the unit volumes play out over the course of the year, as well as the mix of those unit volumes as we see over the course of the year. That can meaningfully change our top line obviously, depending on share shifts amongst the handset providers.

[Operator]

Thank you. This concludes our question and answer session. I would like to turn the conference back over to the management for closing remarks.

[Robert Bruggeworth, President & CEO at Qorvo]

We want to thank everyone for joining us on tonight's call. We appreciate your interest and we look forward to speaking with many of you at upcoming investor events. Thanks again and let's have a great evening.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Doug DeLieto, VP - IR
• Robert Bruggeworth, President & CEO
• Grant Brown, SVP & CFO
• Dave Fullwood, SVP - Sales and Marketing
• Philip Chesley, SVP & President of High Performance Analog
• Frank Stewart, SVP & President of Advanced Cellular

Analysts

• Thomas O'Malley, Director - Equity Research at Barclays
• Harsh Kumar, MD & Senior Research Analyst at Piper Sandler Companies
• Christopher Rolland, Senior Equity Analyst - Semiconducters at SIG Group
• James Schneider, Analyst at Goldman Sachs
• Joseph Moore, Managing Director at Morgan Stanley
• Krish Sankar, Managing Director at TD Cowen
• Gary Mobley, MD & Senior Equity Analyst at Loop Capital
• Chris Caso, Managing Director at Wolfe Research LLC
• Karl Ackerman, MD - Equity Research, Semiconductors & IT Hardware at BNP Paribas