Good day, and welcome to the Qorvo Third Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Douglas DeLieto, Vice President and Investor Relations. Please go ahead, sir.

Thanks very much. Hello, everyone, and welcome to Qorvo's Fiscal 2025 Third 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 in our annual report on Form 10-K 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. 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 at ir.qorvo.com under Financial Releases. Joining us today are Bob Bruggeworth President and CEO; Grant Brown, CFO; Dave Fullwood, Senior Vice President of Sales and Marketing; and other members of Qorvo's management team. And with that, I'll turn the call over to Bob.

Thanks, Doug, and welcome everyone to our call. Qorvo serves six primary end markets. They are automotive, consumer, defense and aerospace, industrial and enterprise, infrastructure, and mobile. Each is underpinned by global megatrends, including electrification, connectivity, mobility, sustainability, datafication, and AI. These trends are driving new functionality and new user experiences that are made possible by the customers we serve and the products our technologies enable. Looking at our business by operating segment, in HPA, we continue to grow our defense and aerospace business while expanding our business in power management. In CSG, we are building upon our strong position in RF solutions across markets while investing in diverse growth businesses, including an expanding portfolio of automotive solutions and SOCs for Ultra-Wideband, BLE, Thread, and Matter. In ACG, we are focused primarily on delivering 5G advanced products for our largest customer and for the flagship and premium tiers of Android. Our largest growth opportunity in ACG is with our largest customer, and we are investing today to continue increasing our share with them in subsequent programs over multiple years. As we said on last quarter's call, the opportunity in master Android 5G declined at a faster rate than anticipated during our Investor Day. Android build plans changed to reflect higher consumer demand for entry-tier 5G devices. In response, during the December quarter, we implemented changes across the organization in how we support Android 5G. This included a reduction in force in ACG and other company functions. We narrowed our focus to the premium and flagship tiers to increase profitability and reduce variability. Our 5G product development spend is now focused solely on premium and flagship tiers. While we continue to serve mass tier programs previously awarded, we expect these lower-margin programs to go end of line in fiscal '26 and…

Thanks, Bob, and good afternoon, everyone. Our December quarter results were favorable relative to our guidance with revenue of $916 million and non-GAAP diluted EPS of $1.61 per share. Our non-GAAP gross margin of 46.5% and non-GAAP operating expenses of $248 million were also favorable to our guidance, which reflects continued cost discipline across COGS and OpEx, as well as recent restructuring actions. On the balance sheet, as of quarter end, we held approximately $770 million in cash and equivalents. Our cash balance at quarter end reflects the retirement of $412 million of our 2024 notes. Following the repayment of these notes, we now have approximately $1.5 billion of long-term debt remaining and no near-term maturities. We ended the quarter with a net inventory balance of $656 million. This represents a decrease of $38 million sequentially and a decrease of $70 million on a year-over-year basis. Turning to the cash flow statement. We generated operating cash flow of $214 million and capital expenditures of $38 million, which resulted in free cash flow of $176 million. As a reminder, our CapEx spend will vary quarter-to-quarter and reflect the timing of cash disbursements. Consequently, CapEx as a percentage of sales in any given quarter may be above or below our target of approximately 5% of sales. We repurchased approximately $100 million of stock at an average price of $73 per share in the quarter. The rate and pace of our share repurchase consider several key factors, including our long-term financial outlook, free cash flow, debt maturities, alternative uses of cash, and other relevant strategic considerations. This approach is designed to ensure that our capital allocation strategy balances future growth with the return of capital and aligns with our underlying goal of delivering long-term shareholder value. Turning to our current quarter outlook. We…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Gary Mobley with Loop. Please go ahead.

Hi, guys. Thanks for taking my question. I wanted to verify some of the numbers that you guys had in your prepared remarks. If I heard correctly, you will have in fiscal year '25 about $875 million of revenue from Android customers and that -- that might whittle down to something less than $500 million over the next five years. I presume the remainder will be primarily Samsung and maybe some high-end customers over in China, am I running through all that math correctly?

Yes, hi, Gary, this is Bob. Thanks. You're correct on the $875 million and you're correct on it's going to be going down about $150 million to $200 million this year, probably the same. Most of that will be in China, to your point, but it does include some of the Samsung business and includes more than HBox because we do have other customers in China, some that sell in the U.S.

Okay, yes.

The remainder will be -- the remainder of that that's still remaining will be in that premium and flagship tier.

Got it. Okay. Thank you. So, Bob, I know you were clear on the assumption that HPA would grow double-digit percent in fiscal year '26, but I wanted to ask a question about the repeatability of the HPA strength that you just showed in the third quarter, if I'm not mistaken, there might have been maybe a Department of Defense contract, maybe something a little bit atypical in the quarter, maybe you can just give us a sense of the details of that to the extent you can and the repeatability of it?

Sure. Thanks, Gary. We did see nice growth in December. We're also going to see even better growth in March and it really gets to the timing of the defense contractors, and when they flow their money to us, some are tied a little bit more. They give us orders right before the end of the government's fiscal year, which as you know, is at the end of roughly our third quarter and then obviously the end of their own calendar year. So we actually see a back half typically much stronger than the first-half in our Defense business. So yes, we saw good growth in December quarter. We're also going to see even better growth in the March quarter. And then as Grant mentioned, it's going to drop off in the June quarter. But for the year, we expect Defense business to grow actually faster than all of HPA.

Great. Thank you, guys.

It's a good point. Maybe, Gary, I'll just expand on that just for a minute. To put it into perspective, our D&A business is now approximately a $400 million business. And again, as Bob mentioned, rather seasonal, the orders there -- customer orders and then the program timing, as he mentioned, will be up significantly in March, and then again, it will fall back down in June as it could be as much as $75 million coming down in June before growing for the entire year largely faster than our HPA business in the 10% to 12% range.

Thanks, Grant.

The next question will come from Harsh Kumar with Piper Sandler. Please go ahead.

Yes. Hey, guys, congratulations on solidly beating the earnings estimate. I guess my first question, Bob, there was a lot in the comments section, but if I heard it correctly, I think you're saying that you're expecting better than normal seasonality for your Cellular business, and I'm assuming that's with your largest customer. Could you maybe talk about what that means? What we should be thinking and expecting? If you can just paint a picture for us, that would be helpful. Then I do have a follow-up.

Yes, thanks, Harsh. On the last quarter's call, we mentioned that we'd probably be down 5% to 10%, you can see our guidance is roughly within that range. And what I said in my prepared remarks is, we'll be down at our largest customer, but not as much as we've been in prior years. And that's all the color that I'm able to add at this time, Harsh.

Okay, that's fair. And then, Grant, maybe you talked about a lot of things on the gross margin side. If I had to say what would be the one or two biggest things that you think, Bob or Grant, that are needle movers for the gross margin? You talked about high-40s and then ultimately even potentially hitting 50s, what would be two of the biggest things that will be happening to make the margin go up in your opinion?

Thanks, Harsh. Appreciate the question. We're working on a lot of fronts as it relates to gross margin. Probably two of the larger ones would be, as we exit some of the Android business that Bob mentioned, it will have an accretive impact on our gross margin just as it relates to revenue mix. Beyond exiting some of that Android business, we're also looking at factory costs and factory footprint and ways we can leverage our outsourced suppliers. We had a sizable workforce reduction and cost reduction that we handled in the December quarter and that's going to help us as we look forward. And then, of course, there's also the process improvement, die reductions, and other sort of blocking and tackling types of things that we're doing in our factories and product design that help drive our costs lower.

Thank you, sir. Thanks.

Your next question will come from Tom O'Malley with Barclays. Please go ahead.

Hey, guys, thanks for taking my question. My first one was just in relation to March guidance. So you gave us $875 million for the year in Android, you could set that pretty easily. And then you talked about less-than-seasonal declines in your largest customer. So you have a decent proxy from where ACG is, the other two businesses to kind of get to your guidance. You talked about mid-teens growth on the full-year. Both of those look to be tracking a little bit ahead just given where guidance is, so is there any weakness that you would call out amongst those two businesses in any pockets other than the silicon carbide stuff, or just trying to square away the math here. If I set Apple down a little better than seasonal and Android to your number, you're getting a little bit above guidance. Any help with March to start?

Sure. Let me take the question. So you're right, the silicon carbide revenue is an important factor. As we look into the March quarter, there'll be a negligible amount of revenue in March versus the December quarter of approximately $9 million. So that's one of the changes. It was -- for modeling purposes, approximately $30 million for the entire fiscal '25. You know, outside of that, as you mentioned, there's typical seasonal dynamics with the ramp-down our largest customer. Android is expected to be up sequentially given flagship platform launches, and then there's a material increase in our D&A business as we've commented on in both December and then again in March. So we're -- in terms of the CSG business on the other side of some large WiFi ramps that we benefited from in Q2, and overall, year-over-year, both those businesses will be up double-digits, and then as we look forward, we'll continue the momentum into fiscal '26.

Got you. And then you gave a decent amount of color in the prepared remarks. On June, you highlighted that that's normally bottom seasonal for the largest customer, and then you talked about defense being down as well, just given that you went out of your way to highlight that in the prepared remarks, could you give us any color from a total company perspective, what you're expecting there?

We didn't provide any guidance necessarily at a total company level, but if you're modeling it roughly, you're in that down 10% to 15% range for the full company heading into the June quarter. Again, the seasonal dynamics there are a very strong defense business, which has grown in terms of percent of our total top-line. So we benefited from the growth, but the seasonality and order patterns that our customers create a dynamic heading into June that's larger than typical and then the Android ramp at a large customer for their flagship will also be ramping down in the same period that our largest customer ramps down. So quite a number of seasonal factors. Although for the year, as Bob pointed out, we do expect to be approximately flat in revenue. So there will be growth in the outside quarters.

The next question will come from Karl Ackerman with BNP Paribas. Please go ahead.

Yes, thank you, gentlemen. Given your comments on the Android ecosystem, I was hoping you could address the outlook for RF content for the industry over the next couple of years if the baseband modem of your largest customer remains at your largest -- remains at your competitor. I asked because some investors have been concerned that reuse could remain if the baseband share remains status quo, but I was hoping to get your clarification on that. Thank you.

Sorry, Karl, could you clarify, did you say our largest customer or the industry? I wasn't sure what you were talking about with the baseband.

I'm referring to your -- within the iOS ecosystem, whether if there is a change or no change in the baseband modem, whether you think there is a growing risk of reuse, or if you do think there is innovation and continued content gains in that area of the market?

I want to make sure I understand the question. You're asking if they stay with the Qualcomm baseband and there's been a lot of discussion about them coming out with their own baseband, if they stay with the Qualcomm baseband, what happens to the RF sections? I just want to make sure I understand it.

That is correct. That is correct. Yes, how do we think about the content opportunity for that? That is correct.

It all depends on their future architectures, which I know we don't comment on, but history has been every successive model, there's more and better RF required, so -- and that includes our tuners to all the other parts that we make for them, better filters to better-integrated modules, et cetera. So we don't see a change.

The only thing that we said and we continue to reiterate is that the ETIC that we would be able to provide to the internal platform we wouldn't provide on the Qualcomm platform. So that would be the major difference that you would see for us.

Got it. Very helpful. Thank you.

The next question will come from Vivek Arya with Bank of America Securities. Please go ahead.

Thanks for taking my question. Bob, I wanted to kind of come back to this long-term growth opportunity for your ACG or Mobile business. You mentioned that it could be flattish, I think, you said for fiscal '26, if I got it right, but then starts to regrow. And my question is, what helps to regrow if it is flattish in a year, when you are gaining content, right, among some of the high-end SKUs and when cellular units are expected to grow, then how does it start to regrow until, I don't know, 60 takes off? I guess my real question is, how much are you baking in for the continued headwinds from all the China in-sourcing and Qualcomm competition? Is it possible ACG business sort of stays flattish for the next several years?

Yes. Thanks for the question, Vivek. In my prepared remarks, we did talk about us actually being down in ACG for FY ‘26 to be clear. So we said that and we said that HPA and CSG would grow double-digits. So that gets you to the company flat and we said that we're expecting in our Android business, the category that we talked about last quarter that we'll be exiting, we're down $150 million to $200 million. So you're right, it's going to be a challenge, therefore, we've got to continue to grow at our largest customer that we've talked about as well as maintain our share in the flagship and high-tier phones in the Android ecosystem. So that's our current plan. But in '26, we were pretty clear it’s going to be down.

Okay. And then maybe a follow-up for Grant on gross margins and OpEx. I think you gave us the gross margin sense for the seasonal quarters and any sense of how the gross margin progresses prior to that. And then I think OpEx you mentioned $250 million, how does that kind of progress through the year? Thank you.

Sure. Thanks, Vivek. For modeling purposes, you could assume that gross margin will follow the same or roughly approximately the same seasonal pattern that we've seen in the past with June below September and December, and I would expect that to continue into fiscal '26. We're continuing to support the existing commitments that we've made to our Android customers on running platforms, and to a degree in periods where we have higher Android as a percentage of sales, it has a seasonal impact on the gross margin. So as we work our way through fiscal '26 and that $150 million to $200 million of revenue related to Android comes out will become less seasonal and expect to be less volatile on our gross margin in addition to increasing as we look into fiscal '26 into fiscal '27. In terms of OpEx, there are some normal seasonal patterns in terms of payroll-related items that we'll see in March. Typically, June could be in that same neighborhood based on program development spend, and I would expect to model approximately that level throughout the year, plus or minus probably approximately $5 million per quarter depending on any of those seasonal impacts.

Thank you.

The next question will come from Toshiya Hari with Goldman Sachs. Please go ahead.

Hi, thank you so much for taking the question. You guys talked quite a bit about some of the restructuring initiatives in motion today or things that you've executed on. You talked about headcount reduction. Obviously, you sold your SIC business and the gas business shifting some production from North Carolina to Oregon. Looking ahead, I don't expect you to share anything that you haven't made public, but would you say, you're kind of in the early innings of this journey and sort of rightsizing your company or optimizing your company or are you in the middle innings, late innings? Any commentary on how to think about restructuring over the medium term that would be helpful.

Thanks, Toshia. This is Grant. Let me start with the question and then we can get to your follow-up if one. We're constantly considering ways to optimize our factory footprint. In fact, it's a topic that we regularly consider. And it shifts with revenue mix and the demand that we're accusing to support overtime. The best way to think about it is as we described it at our Investor Day, we'll manufacture internally where it differentiates our product or where our foundry market doesn't exist. Today, filters is a great example where we make those in Richardson and there's not a commercial or merchant market available for those. And then we will outsource to some of our trusted partners where we can mutually benefit from their scale and their technology development. So we can pick and choose the technologies from our outsourced partners that are best-suited to our products, both from a performance and cost perspective without having to support each of those individual manufacturing technologies in-house.

That's great. Thank you. And then, as a quick follow-up, just on customer concentration, with Apple, I guess, flat or growing nicely and your Android business coming down, revenue concentration is growing, all else equal, I think investors typically prefer diverse revenue stream, I know you guys talked about HPA and CSG outgrowing ACG over the medium to long run and -- so organically, that concentration should come down overtime, but is there a willingness on your part to kind of lean in on M&A to accelerate that diversification process or not so much, you prefer to go at it organically? Thanks.

I'll take this on. In the past, as you know, a lot of our acquisitions have been more technology-based and complement, you know, product offerings that we already have. We would absolutely be open if we felt we were a better owner and we could significantly increase shareholder value by making a transaction like that. I mean, obviously, we did a good job when we merged the two companies of RFMD and TriQuint, and if we saw another opportunity to do that, we would certainly be active on that.

Thank you.

The next question will come from Chris Caso with Wolfe Research. Please go ahead.

Yes, thank you. Just a question with regard to some of your comments regarding your largest customer and on short-term and long-term. And I know, typically, there's not much you could say, but you did indicate that you expected your content to grow this year, but then you talked about like a flat to modestly up increase. I guess I'd interpret that as probably a modest content increase this year, so if you could clarify that? And then longer term, you're going to need growth of that largest customer to grow the ACG business given what you're doing in Android, maybe if you could give us a sense of where the opportunity is for you? Is that just additional content that fits into your traditional strong areas or is that going after some market share from some others?

Thanks, Chris. This is Grant. Let me take the first part of your question and then maybe Dave or Bob could comment on the future opportunity set. But at our largest customer, there's no changes to the comments that Bob made and I made in December, we're confident in the awards that we have to date and the upcoming fall platform. And for the year, we expect it to be flat-to-up modestly there. Volume and mix are always uncertain and if you want to split it into our fiscal year halves, the first-half of our fiscal year versus the second-half, and our largest customer will likely to be down in the first-half of fiscal '26 relative to fiscal '25 and up in the second-half of fiscal '26 relative to the second-half of '25. So our content is more weighted to the Pro models versus the consumer model. So as we pointed out last quarter, the model mix does have an impact on our revenue, but we'll continue to deliver on our strategy of gaining content and as the volume pulls through revenue, I think we're well-positioned there.

I'll take the second part on what we're working on to grow our share and share of wallet at our largest customer, in the areas we currently support, there's opportunities to gain share. Obviously, we've talked pretty clearly with the group that if they come out with their own modem, their baseband, we believe we'll be able to pick up the ETP mix. So that's actually gain and RF content for us that is taking share from an incumbent. And then clearly, there's other highly integrated modules that we've been invited to participate in and work towards winning. So that's the playbook that we're laying out for our team.

Got it. Helpful. I guess the other question was on the tax rate, and -- I think you said -- is it the tax rate could go to 18% to 19%, that's a pretty big jump, and if you could clarify that, and if it could go that high, what are the dependencies and kind of what's the baseline expectation for the taxes in fiscal '26?

Sure. So right now, we are approximately 11% and it could go as high as 18% to 19% as we're modeling today. There's opportunities for us to improve and there's a lot of changes that could happen either internationally or here domestically, so it remains, again, highly uncertain. But to be conservative, right now we're expecting it to grow to approximately 18% to 19%.

Thanks.

The next question will come from Krish Sankar with TD Cowen. Please go ahead.

Thanks for taking my question and thanks to a lot of the color you gave both, Bob and Grant. I'm just curious, when you look into the first-half, your largest customer is expected to release a low end smartphone and Samsung is expected to come out of the Galaxy S25, kind of curious how to think about your content opportunity in those? Is it increasing, decreasing, anything you can quantify would be helpful. And then I had a follow-up.

So we can talk about Galaxy 25 because that's been released. Anything to do with our largest customer that hasn't been released, we're not going to make any comments. But Dave, if you want to take that?

Yes. And when you look at the Galaxy S25, compared to last year, it's very similar, a lot of the highly integrated modules, very similar content we had last year in terms of low-band, mid-high band, and WiFi. I think we've talked about this before with their late change in the modem that did impact us just from a time and readiness standpoint on software that we were not able to keep the Ultra-Wideband socket that we had there in some of the tuners. But in general, it's similar content, but slightly reduced year-over-year because of those factors.

The only thing I can add at least that our largest customer, we commented that -- in my opening comments that our content is skewed towards the Pro and ProMax, not the standard phone that they offer. There's obviously more RF content in those phones, but we have a larger share there.

Got it. Very helpful. And then, Bob, just curious, I know you don't participate in the low-end tier, but when you look at China's smartphones, are your China OEM customers gravitating more towards the premium model now? And if so, how do you think about your opportunity in China with the premium-tier Android?

Yes. In China, I mean, all of our customers, they have global portfolios, they support domestic and overseas markets and they support from the low-end into the high-end, and they certainly all have targets to grow in the premium-tier as much as they can and we're supporting them there with our portfolio. The challenge that we've had in that market that we've talked about and the reason we gave the guidance we did on the annual basis is really that mid-tier collapsing into the entry-tier, and that's the part where we're no longer to participate in, but we'll continue supporting those customers in those premium and flagship-tiers.

Thank you very much.

The next question will come from Christopher Rolland with Susquehanna. Please go ahead.

Hey, guys, thanks for the question. The revenue at your largest customer flat-to-up, if I understand that correctly, that assumption would include opportunities in the PMIC or envelope tracker but does not include any integrated modules that sound like they have not been awarded yet, is that how we should think about that?

No, our awards today give us confidence as we talked about and is a kind of apples-to-apples basis in the fall models, we feel very confident that we're delivering on our Investor Day promise of gaining content and share there in areas where not only we have strength in the past, but also in areas that we've shared content before and have continued to gain share. So our comments are primarily related to the entire portfolio of products we sell into that -- into that customer. I did give some color on the first-half versus the second-half and how fiscal '26 compares to fiscal '25, which should give you some indication of how -- or the timing related to it, but other than that, we can't get into any of the details related to our largest customer and things that haven't yet been released.

Understood. Thank you for that. And in terms of capital, perhaps you can talk about your capital needs looking forward just given you're consolidating some of this footprint. And then, in terms of uses of cash moving forward, what your priorities are overall? Thank you.

Sure. Thanks, Chris. So in terms of our uses of cash and the way we think about capital allocation, there's no change. We meet with our Board very regularly to review every quarter. We go through the different needs from working capital to CapEx to organic, inorganic opportunities to invest for growth and retiring debt was one of those that we had been discussing for quite some time. And then, of course, we're committed to return value to shareholders in the form of our share repurchase. So the waterfall that we look at and review with the Board regularly, no change there. In terms of capital intensity over time, one of the primary rationales for our strategy there is, again, to manufacturer in-house where it differentiates our products and we'll retain that. It's largely the capacity we need -- we have in place and so we're looking at maintenance CapEx and/or any improvements to that process to maintain our differentiation. And then we will use outside partners in order to leverage their scale and prevent us from having to invest more in our factory network from a CapEx perspective.

Thanks so much, Grant.

The next question will come from Ruben Roy with Stifel. Please go ahead.

Yes, thank you. I guess this question is for Dave. You guys talked a lot about the D&A momentum here. I was wondering if you could maybe spend a few minutes on some of the other segments, industrial, enterprise, infrastructure. It's nice to hear the stabilization in areas like broadband. What's the visibility like that we've seen a lot and heard a lot of mixed data points for these end markets? I'm just wondering if you could talk about the design activity environment and your visibility. We appreciate the sort of longer-term guidance by segment, but I would love to hear a little more about visibility into, I guess, sustainability and how you're thinking about growth trajectories as you flow through fiscal '26 in those areas. Thanks you.

Yes, definitely, in some of those markets near term, we see the weakness in the demand of existing running programs like in automotive and industrial. And so -- but we're still growing from a relatively small base in a lot of the businesses that we're engaged there, and it's a lot of new content that we're addressing. So from a forward-looking standpoint, we're pretty excited about the opportunities that we have there. The growth in our funnel of opportunities and the engagements that we have in customers. So we've talked about in enterprise, the upgrade of WiFi to WiFi 7 and the opportunities that we have in adding ultra-wideband for indoor navigation and real-time location services. So that's all going well. Bob mentioned some of the ramps we have going on this year. And then in Power Management, we've got some good engagements there as we move in -- from our solid-state drive business more into the enterprise segment. We've got good content growth opportunities moving forward there. In automotive, we've definitely seen ultra-wideband adoption really starting to take off across all end customers and all the Tier 1s. So the engagement there has been really strong, and we expect to see ultra-wideband adoption happening over the next three to five years. And we expect to be one of the leaders in that market. So that's a great opportunity for us. And one part we didn't talk about in defense is in the SATCOM business. That's been a bright spot as well. And so when you look at the satellites that are going up in a LEO satellite, we could have thousands of dollars of content every time one of those gets deployed in the space. And when you look at the direct to sell, that's more like a base station in space. So we could have tens of thousands of dollars per content -- of content per satellite. So those are great growth opportunities for us in our defense market even outside of the traditional defense business.

Thanks, Dave. If I could ask, hopefully, a quick follow-up for Grant. Just thinking through maybe a little bit longer-term investment into OpEx and you talked about repurposing some of the savings into some areas like you just talked about. But I'm wondering, as you think about sort of focusing on your large customer, in ACG, should we expect any meaningful change of mix in OpEx, ACG versus the other two segments? Or do you think it will be kind of steady state longer term?

We're looking at OpEx improvement across the company, not necessarily within any given operating segment. There's a lot of shared resources across the company that are allocated based on the size of the business and how much effort is put in by the sport functions. So when we think about OpEx, it's across the entire company. The most recent workforce reduction. That was, in certain cases, specific to Android as we think about our product road map and as we look forward, which products we're going to develop and support. And we took appropriate action to reflect the revenue change in fiscal '26 and '27 that we discussed today.

Thank you.

The next question will come from Edward Snyder with Charter Equity Research. Please go ahead.

Thanks a lot. I just want to dig down a little bit more on the guidance for the fall of your largest customer and what your assumptions are there? If we assume units are flat, and the Pro, Pro max split is the same as it was last year. I just want to be clear that you're guiding for content gains. And if those content gains, how much does that include, let's say, leasing two different SKUs with two different modems because I know it seems based on your comments, Bob, that you're pretty confident your content is going to go up on an internally developed model just for the ETP mix alone. I just want to make sure those assumptions are correct to start off with. Thanks.

Thanks, Ed. As far as if there's an internal modem, yes, we're very confident our ETP [Indiscernible] will be in there. As far as the content we've already been awarded, I think we pretty much said already, we believe in that. We did not comment on how many modems they're going to use or anything for their year, but I'm very confident in our belief that we're going to gain content this year based on what we've already been awarded.

Okay. So the awards -- if everything else was held constant, you'll see a content increase is space on awards itself, right?

Yes.

Okay. Great. And then if I could, on the defense side of the business, it sounds like these are going very well, and it's been our kind of the -- probably the best business you've had consistently overall. Do you anticipate much change? I know you mentioned LEOs, and that's to defense too. But do you anticipate much change coming up from some of the spending that we're talking about for all the fallout from the Ukraine war they're talking about, AESA, but more importantly, talking about a lot of the stuff that drones. I'm not sure exactly how Qorvo plays into that in terms of the radar systems for it, maybe you can provide a little bit color and subsequent idea because I know there are long-term plans, but I was just trying to get a feel for how that impacts you or if it does.

Yes. And it's largely driven by the upgrade of those radar systems from mechanical to the AESA radars like you mentioned, and so yes, that's a fantastic content opportunity and we're closely engaged with all the primes and leaders in the market there. So yes, we see for any airborne radar going on planes that we have hundreds of thousands of dollars of opportunities, and for a ground-based system up to $1 million -- $1 million of content per system. So it's definitely a growth area for us and something we're very, very focused on.

It still has gain content, right?

Absolutely.

Yes, it does. So we'd say if it's radar in the plane out in sea or in land, we're already in it, and if it grows, we'll grow nicely.

Perfect. Thanks, guys.

Thank you.

Thanks, Ed.

Your next question will come from Vijay Rakesh with Mizuho. Please go ahead.

Hi, Bob and Grant. Just on the China side, I mean, there's a move looks like with the China handset OEMs to move to mid and low-end because of the subsidies that the China government are giving. Once you exit the low-end Android, how much exposure would you have to the China market?

Sure, Vijay. So we had said on a run-rate from a China Android perspective, we are right around that $100 million per quarter mark and we would expect to track down to the $50 million level on plus or minus.

Got it. And then as you move your mix more to just the top two customers, is that -- is that a risk given -- it's much more a sandbox and you start to compete, I'm sure that your peers have a kind of a pretty similar strategy, does that make that sandbox fairly very competitive and constrictive again?

I would say, today, they're both very competitive, nothing has really changed there at our largest customer as well as at our second-largest customer, I mean, that's what we've been dealing with for the last 10-years at Qorvo. So we're not seeing much change there in that sense. The real change has been, as we've been talking about in China, that mid-tier, which was a great place where we made a lot of money over the years has really downshifted as consumers looking for more entry-level phones. That's been the big change.

Got it. Thank you.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead.

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. Hope you have a great evening.

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