Doug DeLieto - Vice President of Investor Relations Robert A. Bruggeworth - Chief Executive Officer, President, Director and Member of Corporate Development Committee William A. Priddy - Chief Financial Officer, Corporate Vice President of Administration and Secretary Steven E. Creviston - Corporate Vice President and President of Cellular Products Group Norman Hilgendorf - Vice President of Corporate Development and President of Multi Market Products Group

Dale Pfau - Cantor Fitzgerald & Co., Research Division Mike Burton - Brean Murray, Carret & Co., LLC, Research Division Harsh N. Kumar - Stephens Inc., Research Division Nitin Kumar - BNP Paribas, Research Division Blayne Curtis - Barclays Capital, Research Division Tavis C. McCourt - Raymond James & Associates, Inc., Research Division Quinn Bolton - Needham & Company, LLC, Research Division Edward F. Snyder - Charter Equity Research Blaine R. Carroll - Avian Securities, LLC, Research Division Parag Agarwal - UBS Investment Bank, Research Division George Iwanyc - Oppenheimer & Co. Inc., Research Division T. Michael Walkley - Canaccord Genuity, Research Division Ian Ing - Lazard Capital Markets LLC, Research Division Cody G. Acree - Williams Financial Group, Inc., Research Division

Good day, ladies and gentlemen, thank you for standing by. Welcome to the RF Micro Device's Q2 2013 Conference Call. [Operator Instructions] This conference is being recorded today, October 23, 2012. I would now like to turn the conference over to Doug DeLieto, Vice President of Investor Relations for RF Micro Devices. Please go ahead, sir.

Thanks very much, Ian. Hello, everybody, and welcome to our conference call. At 4 p.m. today, we issued a press release. If anyone listening did not receive a copy of the release, please call Samantha Alphonso at the Financial Relations Board at (212) 827-3746. Sam will fax a copy to you and verify that you are on our distribution list. In the meantime, the release is also available on our website, rfmd.com, under the heading Investors. At this time, I want to remind our audience that 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 our most recent SEC filings for a complete description. In today's release and on today's call, we provide both GAAP and non-GAAP financial measures. 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 noncash expenses or unusual 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 corporate website, rfmd.com under Investors. [Operator Instructions] Sitting with me today are Bob Bruggeworth, President and CEO; and Dean Priddy, Chief Financial Officer. I'm also joined by Eric Creviston and Norm Hilgendorf, who head our Cellular Products Group and Multi-Market Products Group, respectively, as well as other members of RFMD's management team. And with that, I'll turn the call over to Bob.

Thanks, Doug, and welcome, everyone. RFMD's September quarterly results demonstrate the value of RFMD's product and technology leadership and the strength of our multipronged growth strategy of diversification, category expansion and content gains. RFMD is delivering on several strategic goals, namely in improving mix of 3G/4G products, expanded participation on the world's leading reference designs and increasing content in the world's leading smartphones. Of note, sales of RFMD's 3G/4G cellular components grew to more than 75% of total CPG revenue, led by PowerSmart, our ultra-high efficiency 3G/4G PAs and new switch-based solutions in support of flagship LTE devices. The customer list for our switch-based solutions continues to expand, positioning RFMD extremely well in terms of product mix and customer exposure. This dynamic is similar for RFMD's ultra-high efficiency PAs, as they ramp across multiple customers and market segments. We expect long-term sustainable growth for this product family as a result of share gains in discrete implementations, as well as new PA duplexes or pads, and multimode, multiband PAs we're sampling today. On the baseband side, RFMD's expanding relationships and robust design activity with platform providers point to dollar content expansion in smartphones across all tiers. RFMD enjoys very strong relationships across the world's leading baseband platform providers. Our representation on the highest volume reference designs continues to expand as we employ our systems level expertise to architect complete RF solutions from the transceiver to the antenna. We are collaborating with the top baseband suppliers on technology assessment and development and we are helping to define the 3G and 4G LTE platforms for 2013 and '14. Among handset customers in China, RFMD is seeing increased design activity led by the demand of our 3G components. RFMD has long enjoyed significant market share in China, and we expect our lead position on…

Thanks, Bob, and good afternoon, everyone. Revenue for the September quarter increased approximately 3.5% sequentially to $209.7 million. CPG revenue was $160.4 million, about 5.2% sequentially. And MPG revenue was relatively flat sequentially at $49.2 million. Our sequential growth in Cellular and our ability to exceed consensus revenue estimates, primarily reflect diversification, category expansion and content gains in 3G/4G components. Gross profit was $73.9 million, with gross margin improving 110 basis points to 35.2%. We exceeded our margin guidance primarily through improved product mix. Operating expenses were $64.6 million, with G&A of $10.2 million, sales and marketing of $14 million and research and development of $40.4 million. You may have noticed that we removed the litigation expense for our non-GAAP earnings. The reason is because Peregrine dropped their ITC lawsuit against RFMD. Going forward, RFMD's litigation expense will decline significantly. Additionally, you can see we continue to invest aggressively in research and development. We target these R&D investments at our multiyear product pipeline, which is expanding as we increase the scope of our relationships, with both platform providers and leading smartphone manufacturers. We believe these investments will result in above industry growth rates for RFMD throughout calendar 2013. Operating income was $9.2 million. Other income was $484,000 and non-GAAP taxes were approximately $1.9 million. Net income for the quarter was $7.8 million or $0.03 per diluted share, based on 281.3 million shares. Now, going to the balance sheet. Cash, cash equivalents and short-term investments totaled $206.9 million. During the quarter, RFMD retired approximately $32 million par value of convertible debt due April 2014, at an average price of 98.3. At the end of the quarter, there was $87.5 million par value of 2014 convertible debt remaining. DSOs were consistent with last quarter at 50 days. RFMD's inventory balance of $136 million resulted in 4.2 turns, which was also consistent with last quarter. Net PP&E was $167.6 million. CapEx during the quarter was $11.1 million, with depreciation of $12.3 million and intangible amortization of $4.8 million. Capital expenditures were targeted at quick payback equipment. Cash flow from operations was $1.9 million, reflecting sales linearity. Now, the business outlook and financial targets. RFMD currently believes that the demand environment in our end market supports the following financial expectations and projections. RFMD expects December quarterly revenue to increase sequentially by approximately 17% to $245 million. RFMD expects a non-GAAP tax rate of approximately 20% and RFMD expects non-GAAP earnings per share of approximately $0.06 per diluted share. And with that, we'll open the call up to your questions. Thanks.

[Operator Instructions] Our first question is from the line of Dale Pfau with Cantor Fitzgerald. Dale Pfau - Cantor Fitzgerald & Co., Research Division: Several questions here. I'll just take a couple and then jump in the queue. Could you tell us who your largest customers were in the quarter? And about what their sequential growth was for those guys?

Yes, Dale, when aggregating contract manufacturers, the 2 largest smartphone OEMs were both greater than 10% customers. Dale Pfau - Cantor Fitzgerald & Co., Research Division: Okay, wonderful. And then could you tell me about what percentage your business came from China, for shipments into China in the quarter?

In '11 as well?

Yes, for obvious competitive reasons, that's a little sensitive information. So we're not going to go to that level of detail in breaking out our business. Dale Pfau - Cantor Fitzgerald & Co., Research Division: Okay. Then maybe you can give us a little more guidance here on your breakout between PowerSmart, your new high-efficiency PAs and maybe your switch products. And then if you could kind of lump in your WiFi products too, to just give a kind of a rough estimate for us.

Sure, Dale. This is Bob. I'll go ahead and take a shot at this. I think what you're asking is kind of what drove a little bit of the growth last quarter and what's driving our growth going forward. And I think what we've said in some of our prepared remarks is our 3G business grew very nicely, and the 3G business includes what you talked about PowerSmart, our switch and signal conditioning product line, along with Phenom. And it's fast approaching our entire 3G business. So the growth that we saw and are going to continue to see is basically driven by those product segments. Also kind of going forward, we're starting to see growth in the 3G entry as well. So it's pretty well diversified growth across all the product families that you talked about, including WiFi. Dale Pfau - Cantor Fitzgerald & Co., Research Division: And one last question, then I'll pass it on. Clearly, you're not only gaining some sockets out there, but you're picking up share. Could you talk about the competitive landscape and just give us a little bit of insight into why you think you're picking up share at this point?

Sure, Dale. I think Eric would love to talk about that.

This is Eric. I'll talk about the growth drivers for the cellular part of the business and it really is, the growth drivers we've been talking about all year for the most part, completely intact. Maybe what added to it a bit is that there is a clear trend with our customers asking us to do more. The complexity of the designs that we're working on between the transceiver and the antenna farm is such that it takes a great deal of engineering capability. And frankly, the customers would prefer if a power supplier could do that. So we are more and more betting on to be complete RF front-end solutions. That's all the power amplifiers, switches, power management, antenna tuning and so forth, all-in-one complete sort of bundled design. It's not just a pricing bundle, we actually do the complete design for the customer. And that gives us the opportunity, I think, for some more chunky design win business. And that's really -- again, we've been talking about this all year. You're beginning to see the fruits of that labor pay off.

Speaking with regard to WiFi -- Dale, this is Norm. We're seeing -- for WiFi, we're seeing increased mobile data rates are driving the need for higher performance, especially in really small spaces such as handsets, tablets and other equipments. So this is driving significant activity throughout the industry today. RFMD has the right products. We're working with the right channel partners. We have the manufacturing scale. And so 11n shipments are strong and growing, and we see 11ac coming around the bend.

Our next question is from the line of Mike Burton with Brean Capital. Mike Burton - Brean Murray, Carret & Co., LLC, Research Division: Can you please give us an update on your margin targets? Obviously, some nice increase there. But both on the gross margin, as well as some of your OpEx targets going forward, what we can expect, certain revenue run rates, et cetera?

Mike, over the longer-term, our model for gross margin is 40%, and our model for operating margin is in the 18% to 19% range. So we feel like we made a huge step forward in progression on our model. And we clearly have a lot of margin drivers. I mean lots of them, but usually -- the usual blocking and tackling like yield improvement on new products and process technologies. We improve factory utilizations that will help gross margins. We haven't really seen the full benefit of the deal we struck with IQE yet, with the benefit of lower [indiscernible] cost going forward. We could see mix to higher margin products, such as we saw this quarter. And in some markets, simply those markets returning back to previous spend levels, such as the infrastructure market in the MPG organization, would also help the gross margin profile. So clearly a lot of tailwinds there in terms of margin expansions, both at the gross margin level, but also we think we're going to be increasing our revenue over the next few quarters. And we don't see a commensurate increase in our expenses, so you get the multiplier effect of the leverage you see in our financial model. Mike Burton - Brean Murray, Carret & Co., LLC, Research Division: Okay. Was there a bogey you put out that I just missed there on the revenue side? And then, could you also talk a little bit about what you think is going on with seasonality now, maybe in the businesses, given some of the changing dynamics in the product portfolio?

Yes, we didn't put a bogey in terms of revenue to achieve a specific point in time, 40% gross margin, 18% operating income target. I mean, clearly, in the R&D area, we're overinvesting, if you will. I mean we're investing to be a much larger company than what we are and we've got a very full product pipeline that's going to support revenue over the next couple of years. In fact, I think it would be appropriate for both Eric and Norm to comment on their R&D expenditures and where it is they're investing more explicitly to drive this growth.

Sure. Speaking for the Multi-Market Group, Mike, we're focused on 3 major categories. The bulk of our R&D resources are focused on #1, WiFi, where we see significant -- we're in the midst of a strong growth uptrend today. Also, we expect to derive continued growth in gallium nitride over the long-term for both military and commercial business. We're strong in cable TV today. We're getting growth in military applications, such as radar and broadband communications, and we see potential for other commercial upticks down the road in GaN. And then the third major category for us is wireless infrastructure, which has been a traditional strength of ours for many years. In the near term, we have growth coming from a point-to-point microwave backhaul applications for wireless infrastructure. And in the longer-term, we see a lot of activity in small cell infrastructure driving long-term growth as well for us. So WiFi, gallium nitride power and also wireless infrastructure, those are the 3 main investment categories for Multi-Market. Over to Eric on Cellular.

Sure. So for the Cellular Group, we have a very, very full product pipeline. It's a very different business for us than it was just a couple of years ago. We now are fully engaged with all leading baseband providers on multi-generational and multi-year product roadmaps. And also clear engagement with the leading smartphone and entry phone manufacturers as well, helping align with their multiyear roadmap. So we have a lot of things we're focused on. Today, I think what's driving a lot of the R&D is the industry push from regional LTE coverage to global LTE coverage. So figuring out how to pack 10 or more bands of LTE into the same size footprint as today, while backward-compatible to all 2G and 3G bands as well. That's a big area of it and that drives a subset really with the antenna control solutions as being a big piece of how we're helping to solve that problem for the industry. And then beyond that, we're looking towards to really solving the battery problem with LTE when you get all that going on, and that's going to bring advanced power management, envelope tracking is a big part of our R&D investment today. We fully expect to be the industry leader in envelope tracking technologies, both in the power amplifiers themselves, as well as in the power management chip. So that's driving it in the near-term. And on the horizon, we see carrier aggregation right around the corner. As Bob mentioned, that's driving another level of systems level architecture work and fundamental core technologies to address that. Mike Burton - Brean Murray, Carret & Co., LLC, Research Division: Okay, great. And then last one, if I could just sneak one more and go in the queue. Norm, could you just talk about the dollar content increase? Or, well, I guess available for you right now in WiFi per dot 11n and then as we go to ac?

Sure, Mike. There are 2 primary drivers here on the dollar content increase. Number one is the increased activity in the 5 gigahertz bands. To date, most WiFi equipments has been operating in the 2 gigahertz bands, which has a wide range of competitors and technologies and a lot of low performance equipments out there. It's a very crowded space and it's a lot harder to get value out of the products that you deliver in that area. Now, 11n and really 11ac in particular, is driving a lot more performance requirements out of the 5 gigahertz bands to get the highest data rates possible in the WiFi networks. And this is an area that's driving a lot of performance improvements out of the RF front-end. It's driving everybody to work with the compound semiconductors, especially gallium arsenide versus other technologies. And so we were able to get much more value out of this category in that band. The second thing which is driving more content, is as people look for greater data rates, they're also using MIMOs. So you get multiple transceivers in each bands. So 2x2 MIMO will have twice as many front ends. So we're seeing the unit volume increase, as well as the overall performance requirements increase. So that's having a compounding effect, while WiFi, in general, is just really taking off in multiple applications.

Our next question is from the line of Harsh Kumar with Stephens Inc.

Just a couple of quick questions, a question for you Bob. As you look at your 3G/4G business being at 75%, do you see a geographic shifting more towards the U.S. and the European market, as opposed to China, which was mostly a 2D territory for you? Could you just address that?

Harsh, let me comment in maybe a slightly different way. Clearly, our customer diversification is being driven by the leading smartphone manufacturers, where some of those phones end up from a regional perspective is not always as clear to us because they're building more world-type phones. I think our exposure to the U.S. is absolutely increasing though. We hadn't had good representation here in several years, so I think that is also picking up. I can comment on that.

Okay, fair enough. And then just wanted to get back to the sort of large sequential increase in December. I guess if you had to sum up as to what happened, what drove that, was that a few blockbuster phones coming through for you, was it a function of availability of certain kind of things in the supply chain that were perhaps supply constrained? Anything you can talk about that?

I just want to make sure I answer the right question. Harsh, you said for the guidance we gave in December?

Yes.

Yes. I think if you remember when we were here about 3 months ago, we talked about the timing of new product launches. And quite honestly, that's what's driving it. We've got, as I think you alluded to, some pretty big marquee phones that are ramping now and we're enjoying business with them as the leading smartphone manufacturers, along with much lower level, the expansion of the 3G entry. So first and foremost, what's driving our growth is being with the right players in the industry who are winning, and we've expanded our dollar content there.

And our next question is from the line of Nitin Kumar with BNP Paribas.

Quick question for you guys. Can you give us a little bit more color on what programs you're seeing ramping up based on this December Q? Is it limited to Samsung, or are there guys you're using a lot of strength from? And then also just a quick comment on Nokia, where do you guys see them going?

I'll take the first part. Eric, you can think about how you want to answer the customer-specific things. As far as what we're seeing driving our growth, it's really -- the leading smartphone manufacturers is where we're seeing strong growth. We can't get into the models and things like that. I think you guys know we can't do that. And also, we are seeing growth across a broad set of customers in the industry. So we have continued to gain share at not just the leading 2 players, but several of the other players in the industry. And as I mentioned, one segment that we're highlighting is in the 3G entry area. So again, being with the right players, who are driving their marquee phones, who are winning in the industry, is the bulk of our growth and the guidance we gave. And I guess, Eric, he asked a little bit about Nokia and our thoughts there.

Yes, Nokia really is a representative of a broad class of customers, essentially. I think, to Bob's point, this is not narrow by any means. We expect in the Cellular business in December to be up more than 10% with nearly every customer, including all of China and all of the smartphone manufacturers elsewhere. So it's a very broad-based growth. Nokia is participating in that as well. We are growing with Nokia, again, as we've mentioned. And essentially, I think the difference now is that you're seeing all the underlying growth come through. We have no more headwinds such as we've had with Nokia, for example.

Well, great. And just a quick housekeeping question. What was your split of 2G/3G revenue for the last quarter? I think you were kind of trending about 2/3 last quarter.

Yes, we were 2/3 last quarter and a little better than 75% this quarter, 3G/4G, yes.

Our next question is from the line of Blayne Curtis with Barclays Capital.

Maybe just to start with the strong guidance for December, you talked about drivers in WiFi, and I guess WiFi was up a decent amount in September. Do you see both segments growing for you in December? Maybe I'll start there.

Blayne, this is Norm. You mentioned do we see both segments growing in December? Which segments are you...

CPG and MPG.

WiFi and CPG. Yes, WiFi is absolutely growing quarter-over-quarter. We had strong growth going back to the June quarter, quarter-over-quarter. We also had strong growth this last quarter in September of greater than 15%, and we have very strong growth for the December quarter as well. So right now, and for the foreseeable future, we see really strong growth continuing for WiFi.

And in aggregate, is MPG going to be up as well in December?

Well, MPG overall will certainly be up as a share of the company. I know we'll see who grows more here.

Okay, and then I guess a question, you kind of alluded to this, that all customers will be up in CPG kind of around 10%. I mean, I guess one of your competitors was talking about 5% industry growth. I was just curious to your perspective on kind of the health of the handset market. There's clearly some winners and losers. And what's your view? And clearly, you're doing better than the market with the 17% growth. But your view on just what the overall market is doing and then how you think about your regular -- Samsung has historically had inventory corrections, kind of how you're thinking about that in factoring to your guidance?

Yes, so this is Eric. I'll take that. And I also want to clarify, you mentioned that I had said that all customers to be up around 10%. I said 10% minimum. In fact, we have many large customers up well over that. Obviously, that drives us to the average 17% growth. So yes, I think you're right, there's clear winners and losers for sure. But we think the overall handset market is going to be pretty darn healthy in December for RF. The marquee handsets that are launching are ramping into massive volumes at high-dollar content for our suppliers. So it's a great market to be in, 17% sequential growth. You're right, we think that will put us in a share gainer category. But the overall market is doing very, very well in December.

Got you. And when you look at what contributed to the September growth and then the mix of business in December, is there any -- obviously, you have a couple of high profile ramps or one high-profile ramp and then some share gains it seems like, but when you look geographically, the 3G low-end stuff, did that really help you out in September? Or is that really layering into December?

So just to clarify, we have multiple, I think, high-profile ramps in the December quarter across multiple smartphone manufacturers. So I think we literally have content in probably every marquee handset ramping in December quarter. And in some cases, we have the entire RF solution. So that's certainly driving a lot of the growth. The 3G entry, your question was whether it was driving September, it just kicked in really at the end of September. Overall, we were actually soft in China for the quarter. But we began to see growth at the end of the September quarter. And when you look at December, the 3G entry business is definitely one of the drivers again. We expect that to be a very big market. We are very -- we have a very high exposure to TD, in particular. The TDS, TD main market is one in which we've got very compelling new devices with multimode power amplifiers that are -- one PowerSmart-type solution that does TD as well as 2G backward compatibility in the same PA. And that has gotten almost universal acceptance. I think in the last TD tender, we were represented in every single handset that won business there. So as they're ramping very strongly right now at China Mobile with TD, we're a very large benefactor of that as well. Again, it's at a smaller level in total, of course, than these marquee smartphones, but it's still definitely a driver of our business.

Our next question is from the line of Tavis McCourt with Raymond James. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: I was wondering if you could dig a little bit into the switch-related products you have now. Does the lawsuit being complete now change your view or how you go to market there? And if you could give us some numbers around kind of what is the market opportunity there for discrete products, and what is a reasonable time frame for you guys gaining share? It seems like you've talked about it quite a bit at the beginning. But if you could throw us some numbers around it, it will be helpful.

Tavis, this Bob Bruggeworth. As far as does it change anything, we never let off the accelerator. If you remember our comments, we were never concerned about this. Our go-to-market strategy did not change. We locked down a number of design wins, and that business has continued to ramp quarter-over-quarter. So the lawsuit, from that perspective, was no change in our behaviors and our customers and who we work with, and expect it to drive forward. As far as sizing the business, we have not continued to size the business. As I said, as we've made the transition from predominantly 2G to 3G, we were pointing to our growth drivers being PowerSmart, Phenom and our switch and signal conditioning product line. And now, today, that is almost all of our 3G business, and that's what's continuing to grow. I will let Eric talk about the portfolio that we have in SSCPL and what he's doing in ROS [ph], he's continuing to add the products in there.

Yes, it's currently one of the largest segments in the RF front-end in Cellular and probably the fastest-growing as well because of all of the requirements for signal routing around the antenna and, as I've mentioned several times, tuning of the antenna elements themselves as well. So we have a very broad family of high-performance 3G/4G antenna switch modules, some of which also contained a duplexer. So they're switch duplexer modules, and then receive duplexer modules that help with routing and diversity applications, and a full family of tuners and other antenna control sort of solutions. It's a briskly growing portfolio, both in terms of the quantity of products, but also in terms of our revenue in that segment.

Would you size the market, Eric? I know we've done that in prior calls. Did we change any of that?

Yes, so it's better than a $1 billion market opportunity for us today. We have, I think, in the past, broken out antenna control because that's a new emerging category, and that was essentially 0 dollars last year. We think within 3 years, it gets to about $500 million opportunity, and we expect to be the clear leader in that segment for sure. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Great. And then follow-up question on the operating cost structure, if you look at the non-GAAP operating costs this quarter for the next several quarters, should we think about that as a base that you'll grow off of? Or was there anything unusual in this particular quarter that we should think about when building our models going forward?

Yes, again, one thing you can take from our operating cost structure, especially our R&D expenses, is we're playing to win as the major OEMs and channel partners. Now we don't see anything that's going to rachet expenses up in a significant way. You get the normal March effect when you get some creases [ph] in payroll taxes and so forth, and maybe that's $1 million or so, plus or minus. But I think from an investment level, we're comfortable we're investing enough to drive the company to better than $300 million per quarter in revenue.

Your next question is from Quinn Bolton with Needham & Company. Quinn Bolton - Needham & Company, LLC, Research Division: Hey Dean, I apologize if I missed this, but just looking at the December quarter, you've got pretty strong revenue growth. Historically, you guys have dropped about 50% incremental gross margin. Is there any reason in the December quarter why that wouldn't be a good rule of thumb to be using as we think about how the gross margin might expand on that higher revenue growth?

Well, you could construct that scenario. However, we're not guiding to gross margin, we're guiding to revenue growth and earnings per share. So really, what we'll have to do as the quarter unfolds and we actually get through the quarter, we'll see how mix turns out, which also is a big driver for the fall-through. But clearly, we had a very nice quarter in September. We're setting ourselves up for a very nice quarter in December, but we still don't know for sure exactly what mix is going to be. And we know that utilization rates, while they're going to improve, they're not going -- our fabs are not going to be full up in the December time frame. Quinn Bolton - Needham & Company, LLC, Research Division: Okay, that's helpful. And then for Eric, you guys got a good design win with the antenna tuning solutions that's ramping now. As you look out to next year, do you see much wider industry adoption of antenna tuning solutions? And if so, is that -- what kind of dollar content per phone opportunity could that be, say, 2013, 2014, in some of the key platforms?

Yes. We certainly see broad adoption of this, and it's not even just in smartphones but even in the entry category in some cases. But clearly, it's been driven primarily by 2 key factors in the smartphone. One is as you're trying to address more and more frequency bands, you simply cannot add enough antennas. There's not enough space. And so you have to be able to take fewer antenna elements and tune them over to the center frequencies of all the new bands you're adding. So that's one key driver, and maybe the primary driver today. And then going forward, I think there'll be a lot of work in more dynamic and active tuning systems that actually improve the signal performance or data throughput in various environments where you get reflections and so forth. So you'll have a much more reliable end-user experience. So those are the key drivers, and I think that it's becoming a well-established part of the industry now. We will see it continue to unfold. In terms of dollar content, it really varies very dramatically from -- you could see solutions, which are in $0.25 to $0.50 range up to solutions which are in $2.50 to $3 range for this application. Quinn Bolton - Needham & Company, LLC, Research Division: Okay, great. And just any timing on the -- sorry, envelope tracking or the PA duplexer modules that you had referenced earlier in the call?

We're sampling the PA duplexer modules and the envelope tracking solutions today, both of which could be in production next calendar year. But we're not giving any more granularity yet on those ramps.

Our next question is from Edward Snyder with Charter Equity Research.

Couple of questions. Eric, if I could, who was your largest customer in the September quarter without giving a percentage and weight for that? And do you think you're gaining share at Samsung? Where do you think that share is? And you said, you saw essential -- I think, sequential growth in all 3 of your major projects, the new products. Can you give us any idea which is larger in the run rate for those? And then, Dean, I know you're holding a lot of capacity open, especially in the U.K. for product ramps. It sounds like you're hitting that at this point. I know you don't want to give utilization rates here, but what kind of revenue level can you support with existing capacity both, I guess, in North Carolina and in the U.K. because that is not going to be adding any in the near term?

I'll go ahead and take both of those. We mentioned that we had 2 greater than 10% customers at the company level, and we're going to leave it at that. And as far as the amount of revenue that we can produce, you have to remember that the increasing percentage of our revenue is -- amounts towards production. So that does free up potentially more capacity to generate gallium arsenide-based revenue. So I really wouldn't want to put an upper limit on it because, if we were running our fabs full out and plus growing our silicon businesses and much of the MPG organization is some type of outsourced capacity, we're probably a $1.5 billion to $2 billion per year company. So we have ample capacity to grow. And once again, on the technology, that's being deployed.

Okay. So then if you can't characterize that way, maybe you can give us some idea of inside versus outside of your revenue? What percentage of your revenue? Because I realized all of the switch stuff and a lot of MPGs is outside, so what percentage of the revenue is inside at this point do you think?

Yes, I'd like to be able to give you more granularity, but I think for now, we're going to stick with -- we did have an outsourced model in some areas of our business. In some areas of our business, we manufacture our own products.

Maybe I'll try it a different way. Number one as you know, many of our modules also include technologies that are produced outside. From a square millimeter perspective, we ship a lot more of our product that is produced outside, from a square millimeter to the raw semiconductor devices.

Okay, was then -- maybe we shipped them to ET which is I know it's coming up. Qualcomm has announced in the 8974 that they'll have envelope tracking. I know they're working on their own solution there. So Eric, when you say you're sampling ET for next year, are you talking about amplifiers that will work with ET or the actual envelope tracking DC-to-DC or whatever configuration you're using, the power control itself?

It's a very good question. Thanks for giving me an opportunity to clarify it. I was referring to both. So in situations where we have the power management or the DC-to-DC converter, we of course intend to have companion power amplifiers. But I think our work on those systems gives us the best core technology for the power amplifier regardless of who makes the DC-to-DC. So in situations where the base band manufacture is choosing to do their own envelope tracking, we expect to have the best PAs for those solutions as well.

So when you're talking about envelope tracking and sampling it next year and all that, do you see -- and I know it's really difficult to answer me, but I was trying to get orders of magnitude, with most of your revenue coming from the entire solution, including the DC-to-DC or would be split, in other words what I want to try to avoid is saying you're in the ET, but we're talking about the vast majority of it is gas amplifiers for ET, and you're selling a little bit of PowerSmart kind of ET solutions for the DC-to-DC. Can you give us any feel at all with how do you think that weighting is going to go?

It's really early. It's a little difficult to tell, so I wouldn't guess.

All right. So then when you're talking ET, are you talking -- are you including PowerSmart in that bucket?

Yes. You could say -- I think the entire PowerSmart portfolio, as we look forward, really becomes the entire solution for multimode, multiband. And in some cases, then the power management morphs into an envelope tracking power management solution. In other cases, we may sell the envelope tracker separately as the power management IC.

Okay. So final question on that is that you're talking ET then outside of -- if we leave PowerSmart out of the discussion completely, and we just talk about non-PowerSmart solutions, are you going to be offering the ET standalone product and the power amplifier end of those 2? Do you think the power amplifier will wind up being larger? And the reason we ask is because there's only a couple of guys who are really working on it. They're your competitors. Quanta as I'm sure you know and [indiscernible] and everybody else. For Qualcomm, putting it in their own device. I mean it sounds like a large set of the volume would be just the amplifier. I'm just trying to get a feel for who is supporting Qualcomm, if it's everybody, if it's just you guys and somebody else or what.

And now that I think we got a good feel for what you're trying to understand. Clearly, our intent is to sell PA. So whether it's a third party, who you've named; a platform partner, who you've named; clearly, those are our targets. Coupled with -- there are some people out there that won't use a third party, that don't have the technology on their platforms. And they will use both the ET solutions, which -- by the way, we do -- it is the PowerCore, which is why it's a subset of PowerSmart, just to clarify that. It's the next-generation PowerCore, but -- with that, we'll also be available. And it's not in PowerSmart as the family today, but it will be available for those that want the envelope tracking along with the PA. So we will service all 3: the third parties you mentioned, the platform providers you mentioned and those that don't have the capability for their own tracker.

So if the third party reference design part of their solution, I don't say fails but underperforms, which I understand CMOS amplifier is underperforming, and they turn to just the power control side of it, and just -- I know it's hypothetical that you guys wind up supplying that. That's an entirely new class of products for you than really this power control. You're not doing that outside of PowerSmart, which is the whole package at this point, right?

I think that's basically correct. We've got a long history in power management, as you know, shipping more discrete DC-to-DC converters. PowerSmart was the logical evolution on that and this is just the next obvious evolution of that power management capability. But you're right, it's definitely an emerging new class of products, and it's a very exciting area right now, because that -- it will have very tangible benefits for LTE handsets.

Our next question is from the line of Blaine Carroll with Avian Securities.

A few questions, if I can. First of all, maybe for you, Eric, in the handset side of the business. Why aren't we seeing -- or can you update us on the thinking on the rollout of ac? And a number of the new devices that are shipping now -- the customers are going to have them for a 2-year period. And I guess I'm just curious why we're not starting to see some ac chips showing up in handsets yet.

Go ahead Norm, why don't you take that?

Yes. Surely, when you're talking about 11ac, then that's the WiFi component. And the multi-market group here is supporting WiFi here at RFMD. What's happening with 11ac? First of all, the IEEE standard is being ratified. The schedule is not to ratify 11ac until November of 2013. So what's ship -- actually shipping today is 11n equipment today. And in the industry, there is a lot of activity, though, to develop pre-11ac gear, both in handsets, access points and other equipment, including tablets and even consumer products. So much like you saw with 11n rollout, you saw equipment showing up on the store shelves even before the spec has been ratified. So what we're seeing in 11ac is a lot of activity to finalize the chips -- the base chips and the transceiver chips with the likes of Broadcom and Qualcomm and other folks, who are our channel partners. And those will not really be rolling out probably until early 2013. We would expect to see some volume shipments of 11ac starting in the March quarter of 2013, really, for all the applications.

Okay. And then when we talk about bands and the antenna control solution and things of that nature, how many bands are there in a device right now? Where do you see that growing to during calendar '13?

This is Eric. I'll take that. It varies widely. Again, of course, in most smartphones today, you have full backward compatibility of 4 bands of 2G and 3 to 5 bands of 3G. We see LTE being introduced, generally, as I've said, regionally, which means 2 or 3 band set of LTE on top of that. So that the trick, of course, going forward is to take that regional LTE and make it more of a global coverage. So you can have one SKU to be sold anywhere in the world. That will require at least 10 bands of LTE on top of the 4 or 5 bands of 3G, on top of the 4 bands of 2G. Now a lot of those -- just to be clear, those are different modes. Some of the frequency bands share 2G, 3G and 4G. So it really does vary quite a bit, but it's getting to be a very large and complex problem.

And can we switch gears a little bit and talk about the tablet market? I mean, today was a big tablet day in the industry. And can we talk about the dollar content -- the RF-dollar content is in a tablet versus a smartphone? And are they coming a little more in parity with one another? And the success that you've had with your antenna control solution in a new platform, is it fair to say that, that same success is occurring in some of the devices that were launched today?

So first thing when you talk about tablets, of course, you have some of them that don't have cellular modems. They all have WiFi, so it's a WiFi opportunity every single time. And when there's a cellular modem attached, it generally looks very similar to a smartphone. If anything, it will be kind of the first generation or the more complex solutions of the rollout first in tablets maybe, where there's more size available and also a higher need for better data throughput and so forth and coverage. So from the cellular standpoint, for the most part, a tablet looks an awful lot like a smartphone, just one with a little more capability. And Norm, you want to talk about the WiFi?

Yes. For WiFi, we love tablets. They're bigger than handsets, so you can get more antennas in there and more transceivers, more bands. So they'll go with multiple-in, multiple-out configuration. So you have multiple WiFi bands, supported typically 4 devices in there versus just 1 or 2. So for WiFi, we see tablet has 2 and typically 2x the contents of other applications.

Okay. And then just a quick one. I don't mean to ask a lot of questions. But Dean, when you look at one of your now larger customers and the stockouts that they're having and so forth, as you look at seasonality into the March quarter, is -- has normal seasonality changed somewhat because of the launch of these products towards the end of the year and maybe productions not being able to ramp during December, so that you do you have some follow-through into that March quarter as well?

Well, we'll take it one good quarter at a time. And I think, yes, normal seasonality may or may not be normal by the time we get to the March quarter. I mean we've seen sometimes up in the March quarter. So it's just simply too early to tail. We'll be able to give you more color on the March quarter when we report our December results.

And our next question is from Parag Agarwal from UBS.

Eric, in terms of products in the CPG, where are you seeing the largest growth? So it is coming from switches or antenna control solutions or it is coming from power amps.

As I think we've said a few times, we're not breaking those out separately. They're all growing very rapidly with the content expansion, power amplifiers, each of these bands and modes, you're adding more power for our [ph] content. But you're also adding switch content. So it's all -- they're all growing.

Okay. And for Dean, last time you had a revenue of about $245 million, the operating margin was 16%. Now if I do the math, and we're still working on the model, but I think it is coming down to 8% or 9%. So going forward, as you -- as we try to get your model, the upside to the margin is going to come basically from revenue. Is that the right way to think about it? Or you have at the margin levels as well?

I think the big difference is the level of R&D expenditures now and where we're taking the company in terms of product leadership and customer diversification, category expansion. So as I mentioned already, our investment level is to be a much larger company than what we currently are, and we've got a very clear roadmap to get there. So there's a big difference between this year and 1 year ago. I mean this year we, obviously, are more aligned -- much more aligned with the 2 largest handset OEMs. We're much more aligned with the key channel partners. So we're very much inside the tent with targeted R&D investments for products to support long-term growth rates. So I think that's probably the primary difference between the quarters.

Our next question is from the line of George Iwanyc with Oppenheimer. George Iwanyc - Oppenheimer & Co. Inc., Research Division: Dean, just to make sure, on the litigation side, are there still any cases that are open? And how would that proceed over the next year or 2?

Well, there is a case that Peregrine has filed in District Court that continues to be open, and we have no idea what their strategy is with this case either, since they just recently dropped the ITC case. And typically, these cases are -- they simply take a long time to ever, ever even come to court and let alone any type of decision. So once again, we very much defend our IP, and the fact that we have not violated anyone else's IP. I think that clearly came out in the ITC case, and so we're just plowing ahead, as Eric stated, that with new product development and design wins across multiple customers. George Iwanyc - Oppenheimer & Co. Inc., Research Division: Okay. And so the litigation -- there's still some litigation expenses that are at a baseline...

They're only some, yes. That's going to go down dramatically over the next couple of quarters. And at some point, if the case still stands, a couple of years from now or whenever, then we'll come back and readdress it. But this may go away for good. We simply don't know what Peregrine's strategy is, but this makes no sense at all to RFMD. George Iwanyc - Oppenheimer & Co. Inc., Research Division: Okay. And Eric, can you give us a sense of what the typical dollar content that is PA-driven in the smartphone as of this point? And then how much is switch, WiFi and everything else driven from just a general ASP standpoint?

I mean it, again, will vary a lot by which smartphone we're building and for what application, but there's several dollars in PA content. You can usually get $3 to $4 worth of PAs with all the satellite bands of LTE and so forth included. Switch content, when you include the tuners and so forth, you can usually get to $2 to $4 worth of content there as well. And so altogether, when we look at the LTE handsets, there's really kind of a minimum of about $4 to $5 worth of content, and maybe the maximum is on the order of $10 worth of our content when you put it all together. And that -- so that -- in that case, I'm including the filters as well and everything that goes in there.

Our next question is from the line of Mike Walkley with Canaccord Genuity.

I just wanted to ask a follow-up question on China. With China Mobile making a big push on TD, I understand the ramp there. But with a later Chinese New Year this year into February versus January, do you expect to have that seasonal dropoff in the March into China like we saw last year? Or do you think with the later Chinese New Year a little less of a dropoff into the March quarter after the strong TD ramp to close the year?

Yes. I think it's a little bit too soon to tell. I think it was 2 or 3 years ago, we had the same question because Chinese New Year was a little bit later, and it didn't work out. And I think it was 1 year or 2 ago, it did work out. So we're not really ready to predict that. I think, to maybe your question, it depends on the rollout of TD and how long that goes and China Mobile continues to push forward with that, coupled with the global macro picture and how this Chinese economy does. So I think those are 2 factors that will play into how it does play out. But right now, we're not going to be able to have any visibility into that.

Okay. And just one other question. On the call, you indicated that, given the strong pipeline of products, you expected to outgrow the industry for 2013. Can you just share with us, maybe on a broad level, just thoughts for industry growth in 2013, given strong mix of LTE driving RF content, maybe offset by some macro concerns? How are you thinking about the framework for 2013 industry growth?

Yes. A lot of it will depend upon the macro backdrop, of course. But in general, we're currently modeling high single-digit unit growth for the handset industry. But that should translate into kind of a 10% to 15% at least dollar growth for the RF content. It could be even a bit higher than that.

Our next question is from the line of Ian Ing with Lazard Capital Markets.

Could you go deeper into the puts and takes on the China market? I think you got some mix shift to the low-end 3G and 2.5G EDGE smartphones. But also you got the 2G PA market being somewhat competitive with some local entrants and some startup CMOS PA vendors. And is your optimism based on some of your reference design partnerships or the OEM market or the white box market?

That's a very granular question in the China market. Just to be clear, we participate in the 2G segment you discussed, and we do have seen that decline over time. The 2.5G EDGE market, we also participate in and those are turning into smartphones as you pointed out, along with 3G entry. So we are seeing that market continue to shift from 2G to the 2G smartphones to 3G entry. And on the 3G entry side, that's where we're starting to see our growth, that we talked about earlier.

Great. And then in terms of helping us model some of the exposure to your leading OEMs, would you say that the order lead times are normal number of weeks ahead of builds? Or are they stretching out, giving some -- given some of the very high volumes? Or is there any difference between the top-tier OEMs or the other OEMs?

Yes. We -- number one, we haven't seen any behavioral changes. And number two, each one of the even top-tier guys have different programs that we work with from schedule share to different methodologies to pass back-and-forth demand. I think what's most interesting is that they are working to be tight to the end demand. And we see changes frequently. But as far as lead times go, we have the same visibility we've always had with them.

And that's 4 to 6 weeks about or...

No. Many customers give us a much longer horizon. My point is it changes. But they give us the visibility to their build plans at much longer than that.

Okay. And then last question is, your December OpEx, could you have any more granularity? It's sort of a wide range, given growing slower than the top line to get to $0.06?

So gross lower than revenue and positive so...

Yes. Well, now what we have said is that we would see revenue growth and earnings growth and no significant change in our expense structure.

And our next question is from the line of Cody Acree with Williams Financial.

On the converged side, especially as you lead into LTE, can you just talk about maybe [indiscernible] the baseline progress for LTE [indiscernible] and maybe the breadth of adoption of conversion on the baseband side?

Sorry, Cody, it's a little hard to hear. But if I understood correctly, you wanted some more color on sort of our engagements with PowerSmart. In particular, it sounded like with the baseband manufacturers, is that right?

Particularly on LTE.

Yes, yes, with LTE. So we are engaged with, I think, 6 or 7 baseband manufacturers now with our PowerSmart MMMB for LTE. And so it -- there's a broad number of people that are developing systems for LTE, and everybody is trying to solve the same problem essentially, which is how to pack all this capability into the smallest size possible with the best performance. So we think we've got a very good solution for that. It's a -- yes, we're doing a lot of system integration with a lot of baseband companies right now.

So it sounds like you'd be able to [indiscernible] in the market [indiscernible] any time in the first half. Or is that really a second half opportunity?

I say it's near term.

It's near term, okay. And then maybe if you could talk about the dollar content then as you move from 2G to 3G on PowerSmart.

So -- when you say 2G going to 3G...

Sorry, 3G going to... Sorry, 3G to 4G.

Okay, yes. So really, it is -- I think I just -- what I said before, it's probably the best guidance I can give, because it's really important at this point. I mean at the very beginning, the [indiscernible] coming back to that. We are not any longer marketing PowerSmart or a switch here or an antenna tuner there. But really, every opportunity we sit down with the customer, or the baseband provider on it. We're talking about the entire RF front end. So we're bringing to them a complete reference design, with power amplifier, switch, power management, antenna tuning and the filtering all-in-one design. So when we look at that content, we're really seeing, in 3G today, a $3 to $5 kind of a window for that, generally in these devices and that going from $4 to $10 in LTE.

And then lastly, on the antenna control side, can you just talk about the competitive landscape? I know it's relatively new for a lot of people, but do you expect to be the primary players there? And I guess, maybe if you can talk about where you expect your market share to be, I suppose, to the [ph] next year?

Yes. We generally don't talk about market-share targets specifically. It will be very far north of our average market share. I think this is a segment which we stand to do very, very well in. The competitive landscape is unique. We don't see many of our traditional competitors there. And the traditional approaches to this, as the industry was nascent last year, the technologies that were being used were a little more exotic. It was kind of an exotic application. There were exotic technologies. What we did really, I think, is bring a very high-volume, cost-effective technology to that market. And that's why I think we've kind of got the share we have really. So we're -- it's really too early to call the competitive landscape. There hasn't been any kind of #2 players step up yet that we could -- we can really quantify for you.

And I'm sorry, one last thing. On the -- it sounds like I should push you into TD in China, maybe some of the prior issues of pricing aggression in prior generations has been a big [indiscernible], is that correct? And I guess, what are you expecting for pricing as you move into TD?

Sorry. Again, Cody, I couldn't quite make that out. It sounds like you're asking about the pricing trend in TD versus what we're used to in other China markets?

Yes. Just -- I know that things had been very aggressive prior to TD in China and their 2G market. I guess, what are you seeing in TD and what are you expecting for this year?

Yes. There's one very good thing there is there's much fewer competitors in TD. There were more in 3G, but there are even more in 2G. So -- and that does tend to kind of scale with the price competitiveness roughly so...

As well as the size of the market. TD is not as large. I want to make sure that they don't get too far ahead on the size of that market. It's growing nicely for us. But to your point, 3G is much bigger, and 2G is even bigger than TD.

And I'll turn it back to management at this point.

Thank you very much for joining us tonight. RFMD is winning by earning content on our customer's flagship devices, and we're working today to expand our content on the flagship devices in key platforms anticipated for next year. We are executing on a growth strategy of diversification, category expansion and content gains. And we expect this strategy will support an extended period of sustainable revenue growth, improving financials and delivering greater shareholder returns. Thank you again, and goodnight.

Ladies and gentlemen, this concludes the RF Micro Devices Q2 2013 Conference Call. If you'd like to listen to a replay of today's conference, please dial 1 (800) 406-7325 or (303) 590-3030, using the access code of 4567595. ACT would like to thank you for your participation. You may now disconnect.