Skyworks Solutions Q3 2024 Earnings Call Transcript

Participants

Corporate Executives

• Rajvindra S. Gill, Vice President, Investor Relations
• Liam K. Griffin, Chairman, Chief Executive Officer and President
• Kris Sennesael, Senior Vice President and Chief Financial Officer

Analysts

• Matthew Ramsay, TD Cowen
• Chris Caso, Wolfe Research
• Timothy Arcuri, UBS Group AG
• Christopher Rolland, Susquehanna Financial Group
• Craig A. Ellis, B. Riley Securities
• Kevin Cassidy, Rosenblatt Securities
• Nick Doyle, Needham & Company LLC
• Thomas O'Malley, Barclays PLC

Presentation

[Operator]

Good afternoon, and welcome to Skyworks Solutions Third Quarter Fiscal Year 2024 Earnings Call. This call is being recorded.

At this time, I will turn the call over to Raji Gill, Vice President, Investor Relations for Skyworks. Mr. Gill, please go ahead.

[Rajvindra S. Gill, Vice President, Investor Relations at Skyworks Solutions]

Thank you, operator. Good afternoon, everyone, and welcome to Skyworks' third fiscal quarter 2024 conference call.

With me today is Liam Griffin, our Chairman, Chief Executive Officer and President; and Kris Sennesael, Chief Financial Officer for Skyworks. This call is being broadcast live over the web and can be accessed from the Investor Relations section of the Company's website at skyworksinc.com. In addition, the Company's prepared remarks will be made available on our website promptly after their conclusion during the call.

Before we begin, I would like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. Additionally, the results and guidance we will discuss include non-GAAP financial measures, consistent with our past practice. Please refer to our press release within the Investor Relations section of our Company website for a complete reconciliation to GAAP.

With that, I'll turn the call over to Liam.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Thanks, Raji, and welcome, everyone.

Skyworks delivered solid results for the third fiscal quarter of 2024. We posted revenue of $906 million, delivered earnings per share of $1.21 and generated free cash flow of $249 million. Revenue, gross margin and EPS met or were slightly above our prior guidance. Importantly, year-to-date free cash flow was $1.3 billion, or 40% free cash flow margin, which reflects strong working capital management and operational excellence.

In mobile, we are seeing encouraging signs that inventory levels and order patterns are normalizing. We are energized about the prospects of Generative AI catalyzing a meaningful smartphone replacement cycle and driving higher levels of RF complexity. We expect new AI features will only be available on the latest next-generation smartphones, potentially fueling a multi-year upgrade cycle. We are uniquely positioned, given our long-standing relationships with the leading smartphone OEMs, best-in-class RF technology, and a global manufacturing footprint. In broad markets, we delivered two consecutive quarters of sequential growth since the December bottom, and we anticipate modest growth for the balance of 2024.

In edge IoT, where demand is improving, we have a strong design win funnel for Wi-Fi 7 systems and we expect a healthy multi-year upgrade cycle given faster data transfer speeds and lower latency. In traditional data center and wireless infrastructure, inventory levels remain elevated, which is prolonging the recovery as we continue to undership natural demand. However, once industry conditions stabilize, we expect end customers to replenish inventory back to normal levels.

Lastly, in automotive and industrial, we are working through excess inventory levels, but seeing signs of stabilization. We remain bullish on our design win pipeline across our power isolation, RF, and digital broadcast solutions for the connected car and EV markets. Over the medium- to long-term, we believe Generative AI will migrate to the edge. Most significantly, we believe the roll-out of compelling AI applications will drive a smartphone replacement cycle, one that is currently the longest in history, standing at over four years. In edge IoT, AI enabled devices increasingly incorporate machine learning to support language and computer vision models. Robust RF is critical to facilitate the continuous training to inference between device and cloud. Over time, automotive OEMs will train on big data in the cloud and stream software downloads through over the year updates, supporting higher levels of autonomy and vehicles. To facilitate these trends, OEMs need power and extremely fast RF connectivity.

For next-generation data centers, complex workloads, supporting large language models, will propel upgrade cycles in switch, compute and optical networks. Over the medium- to long-term, Skyworks is well-positioned with our high-performance timing solutions, targeting 800-gig and 1.6 terabit Ethernet switches in optical modules. Ultimately, our view is there will be a hybrid approach to AI computing, a combo of on-device and cloud-based. Data can be trained in the cloud and deployed to the edge for inference on new inputs. More complex AI tasks will be processed in the cloud and less complex on device.

In addition to these new usage cases, AI now enabled smartphones will further elevate the technological burden, resulting in premium for on-board space, requiring higher levels of integration in advanced packaging, energy efficiency translating to lower power consumption, low latency pushing the boundary of signal integrity and higher throughput and connectivity upgrades with 5G advanced and 6G. These increased technological demands play to Skyworks' strengths, given our deep customer relationships, exceptional engineering talent and strong IP portfolio.

Turning to our quarterly business highlights. We secured 5G content for premium Android smartphones, including Google Pixel 8a, Samsung Galaxy M, and Oppo Reno12, among others. We supported the launches of Wi-Fi 7 tri-band routers and access points with NETGEAR, TP-Link and Cambium Networks. We accelerated our design win pipeline in automotive, including telematics, infotainment and CV2X. Despite a challenging demand environment, we continue to make strategic investments in our long-term growth areas, expand our customer base and diversify the reach of the business.

With that, I will turn the call over to Kris for a discussion of last quarter's performance and our outlook for Q4 of fiscal 2024.

[Kris Sennesael, Senior Vice President and Chief Financial Officer at Skyworks Solutions]

Thanks, Liam. Skyworks revenue for the third fiscal quarter of 2024 was $906 million, slightly above the mid-point of our outlook. Mobile was approximately 61% of total revenue, down 21% sequentially. Broad markets were approximately 39% of total revenue, up 1% sequentially. Gross profit was $416 million, with gross margin at 46%, in line with expectations. Gross margin grew 100 basis points sequentially, reflecting our ongoing cost reduction actions and favorable mix shift.

Also, during Q3, we further reduced our internal inventory, resulting in sixth consecutive quarters of reductions. Operating expenses were $197 million, reflecting our strategic investments in our technology and product roadmaps. We delivered $219 million of operating income, translating into an operating margin of 24%. We generated $3 million of other income and our effective tax rate was 12%, driving net income of $195 million and a diluted earnings per share of $1.21, which is in line with our guidance.

Third fiscal quarter cash flow from operations was $274 million. Capital expenditures were $24 million or less than 3% of revenue, resulting in a free cash flow of $249 million. Year-to-date, we generated $1.3 billion of free cash flow, or 40% free cash flow margin. We continue to drive robust cash flow through consistent levels of profitability, careful working capital management and moderating capex intensity.

During fiscal Q3, we paid $109 million in dividends and repurchased 764,000 of our common stock for a total of $77 million. Cash and investments grew to nearly $1.3 billion, and we have $1 billion in debt, providing us excellent optionality. We remain committed to delivering shareholder value through a disciplined approach to capital allocation. Given our conviction in Skyworks' long-term strategic outlook and consistent strong cash generation, we announced a 3% increase to our quarterly dividend to $0.70 per share.

Now, let's move on to our outlook for Q4 of fiscal 2024. We anticipate revenue of $1.00 billion to $1.04 billion. We expect our mobile business to be up approximately 20% sequentially as demand and supply patterns appear to be normalizing. In broad markets, we anticipate modest improvements, representing three consecutive quarters of sequential growth. Gross margin is projected to be in the range of 46% to 47%, increasing 50 basis points sequentially at the mid-point. We anticipate gross margin expansion during the remainder of 2024, driven by our cost reduction actions, favorable mix shift and higher utilization rates. We expect operating expenses in the range of $197 million to $203 million, as we continue to make strategic investments in mobile and broad markets to drive share gains and increased diversification.

Below the line, we anticipate roughly $3 million in other income, an effective tax rate of 12% and a diluted share count of approximately 161 million shares. Accordingly, at the mid-point of the revenue range of $1.02 billion, we intend to deliver diluted earnings per share of $1.52.

Operator, let's open the line for questions.

Questions and Answers

[Operator]

Thank you. [Operator Instructions]

Now, our first question coming from the line of Matt Ramsay with TD Cowen. Your line is open.

[Matthew Ramsay, Analyst at TD Cowen]

Yes. Thank you very much. Good afternoon, everybody. I guess, for my first question, we've -- lots -- your Company and all of your industry peers have been through this cyclicality in broad markets for you guys and lots of industrial businesses for your competition. And it's great to see us get back on sort of a sequential growth from a revenue perspective, and a chain of that which will, I assume, continue as you guys come out of the cyclicality here.

But as you revisited that diverse set of businesses, I mean, it's a question that a lot of companies in this space get. Any sense now of what the, sort of -- I don't know, kind of, equilibrium sell through revenue level is that this business supports right now? We were obviously over-shipping for a bit and then have under-shipped for a bit to try to clear the channel. But any sense of where you are right now on the shipment levels you guys are guiding to relative to end consumption and when we might get back to equilibrium? Thanks.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Yeah. Sure. This is Liam. So, if we start to take a look at those markets, we are actually gaining some share and driving revenue. We're seeing opportunities in auto, that are substantially being grown. We see the connected car as a significant opportunity for Skyworks. We already have meaningful design wins, and I know we can do much more. We're looking at more and more opportunities in safety systems, driver assist. We talked a little bit about that. All those markets are actually doing quite well. And we have a lot of room to grow.

Then moving into some other markets that are quite powerful today are the Wi-Fi cycles. We have a Wi-Fi 7 upgrade today that is going really well, very important technology. Lots of volume coming. And certainly, an extension here as we get to more and more opportunities. So, home enterprise, commercial, industrial, wearables, all of these markets fall into that category, and have been really powerful for us, and we expect that to continue. And further, we have some great opportunities in infrastructure, leveraging networking and cloud. We talked about 800-gig and 1.6 terabit speeds. A lot of really powerful vectors there that can come about here as we move into the next quarter.

[Matthew Ramsay, Analyst at TD Cowen]

Got it. Thanks, Liam. I guess, as my follow-up, if we look into the wireless market, there's -- it seems like the market has some fairly bullish expectations on units with your largest customer, and you guys had talked last quarter about how the content that changed there a little bit. I just wonder if you could give us any early thoughts, Kris, on sort of the shape of the year or this cycle in your wireless business? Maybe you have a chance to lean into Android a little bit more, and there's the dynamics in both directions, that I mentioned with Cupertino [Phonetic]. So, if you have any early thoughts, we'd appreciate it. I know it's early to ask about that, but I get asked about it a lot.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Yeah. Look, I mean, there's a lot of opportunity there. We are seeing stronger signals in demand, for sure. We're starting to see that actually accelerate, leveraging some of the more unique products that we have within the Skyworks bench. So, there's a lot of opportunity there. Our outlook looks very good as we look forward. The technologies that we're working on right now are really difficult. They're very, very challenging. It takes great companies and great people to make it happen.

As you've heard many, many times, our labs, the fabs approach really does work. There's a lot of customization as we start to grow into some of these new markets, mobile and others. So, we feel really good about that. And I think there's an opportunity for us to continue to move forward. We're just beginning to now engage in AI, and we see that in the phone. We definitely see that as a major, major catalyst for smartphones. And I'll tell you, I don't think there's a company that can do that better than Skyworks. So, we look forward for the opportunity. We've got the key pieces in place. And it's a time for us to just put up a little bit more revenue here.

[Matthew Ramsay, Analyst at TD Cowen]

Appreciate the color, guys. Thank you.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Sure.

[Operator]

Thank you. One moment for our next question. And our next question coming from the line of Chris Caso from Wolfe Research. Your line is open.

[Chris Caso, Analyst at Wolfe Research]

Yes. Thank you. Good evening. The first question is on broad markets. And it seems like that revenue is just kind of bouncing along the bottom here. You mentioned expectations for some modest growth going forward. Can you speak to the different end markets within broad markets? I'd imagine that some of the consumer markets that corrected earlier are perhaps some of the ones that are coming out, but I know some of the industrial markets still have some inventory to go through. What's the stage of the inventory correction? And kind of how much of that business is normalized and how much of that still has customer inventory that needs to be burned through?

[Kris Sennesael, Senior Vice President and Chief Financial Officer at Skyworks Solutions]

Yes, Chris, great question. So, first of all, we did call-out broad markets at the bottom in the December quarter. And so, we've really turned a corner there, and we have seen now two consecutive quarters of sequential growth, and we do expect further growth in the September quarter, that's incorporated in our guidance. And we do, beyond the September quarter, further sequential growth and actually an acceleration of that sequential growth, returning back to year-over-year growth in our broad markets business.

Now, as you know, there's multiple different end markets there. As it relates to consumer enterprise, where we mainly play with our connectivity solutions, I would say that's getting a more stable environment. Most of the inventory correction is over there. And we are growing the business there, mostly because of a content uplift story, right? As Liam indicated, Wi-Fi 7, a lot of good traction there. That's a big step up in content compared to Wi-Fi 6. Some of those other end markets, there's still an inventory correction ongoing, automotive, industrial markets, very similar to what our peers and competitors have seen in that market. But again, as Liam indicated, we have strong design win momentum there. We have great opportunities in EVs with our power isolation or in the connected car with our connectivity solutions, Wi-Fi, 5G, digital radios. And so, we are able to book the trend there [Phonetic] and see some stronger revenue growth opportunities.

[Chris Caso, Analyst at Wolfe Research]

Thank you. As a follow-up. I wanted to ask a question on gross margins, and understand you're guiding up 50 basis points for the September quarter. I know that you've taken some cost reduction actions, depreciations coming down. What would you say is the trajectory for gross margins as perhaps some revenue comes back and utilization comes up? What sort of the slope and the destination for the gross margins as those things occur?

[Kris Sennesael, Senior Vice President and Chief Financial Officer at Skyworks Solutions]

Yes, Chris. So, there, as well, March was the bottom for us. We're at 45%. You saw already 100 basis points improvements in the June quarter, and we just guided another 50 basis points improvement going into the September quarter, and we do expect further gross margins improvement in the December quarter. Obviously, then there is seasonality in our business. But when I look at fiscal '25 or '26 and beyond, we do expect further gross margins improvement.

And it's basically a combination of multiple factors, right? We continue to execute on cost reductions into our factory. As the top-line is growing, we are getting better utilization into our factories. We are bringing higher value products to the market, for which we are getting paid. And we have a little bit of a tailwind from a mix point of view, as broad markets is growing at higher than above gross margins. So, we think we're on the right track here. And we will see ongoing further gross margins improvement.

[Chris Caso, Analyst at Wolfe Research]

Thank you.

[Operator]

Thank you. And our next question coming from the line of Timothy Arcuri with UBS. Your line is open.

[Timothy Arcuri, Analyst at UBS Group]

Thanks a lot. Kris, can you give us a sense of how big the large customer was for June? And then, in September, it's ranged between mid-50s, when Android was higher to the high-60s last year. Any sense of how to think about how that's going to trend? And what you're embedding in the guidance?

[Kris Sennesael, Senior Vice President and Chief Financial Officer at Skyworks Solutions]

Yeah. So, our largest customer in the June quarter was approximately 65% of total revenue. That was down sequentially, maybe a little bit more than normal seasonality. And we explained that at the last earnings call, where we saw some build-up of inventory in March, April timeframe. And so, we pushed the brakes in June.

But looking ahead now into September, we think the largest customer will be slightly above 65% of total revenue and it will be up on or about 20% sequentially, right, as we execute and support our large customer in ramping up new products that they are bringing to market.

[Timothy Arcuri, Analyst at UBS Group]

Thanks, Kris. And then, can you give us a sense also of what December -- I mean, December is kind of all over the map seasonally, but it's up in the range of 10% usually. Is that a reasonable bogey to think about for December?

[Kris Sennesael, Senior Vice President and Chief Financial Officer at Skyworks Solutions]

Yeah. So, we only guide one quarter at a time, and I would really stick with that. But, yeah, it's clear that we do expect further sequential growth going into the December quarter, but we will guide next quarter on that.

[Timothy Arcuri, Analyst at UBS Group]

Okay, Kris. Thank you.

[Operator]

Thank you. And our next question coming from the line of Christopher Rolland with Susquehanna. Your line is open.

[Christopher Rolland, Analyst at Susquehanna Financial Group]

Hi, guys. Thanks for the question. You referred to some AI smartphones, and I think we all got excited about some new AI announcements this quarter, driving a refresh cycle. So, I guess, my first question is, how much of this kind of acceleration, or pull-in the refresh cycle did you see, or is in your September guidance? Did you see kind of the same excitement that we all kind of felt, or do you think this is something really to play out December and onward, as we move through time and new product launches?

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Yeah, great question. I think, this is an early stage of a very, very long ramp in mobile. There's no question that AI is going to make an impact. I really believe that, and I think most of the market does. But what comes with it is also a challenge. You have to have very, very difficult challenges to be able to manage the AI world. Fortunately, with Skyworks, this is what we do all the time. And we're a deep technology company. We know how to handle the really challenging opportunities. We're dealing with higher levels of MIMO, more paths, uplink and downlink, bringing in carrier aggregation, better filtering, and you know that at Skyworks, really, really important to get those filters down and new frequency bands.

So, it's a very challenging ask to deliver. But fortunately, at Skyworks, these are technologies that we understand. So, we are looking forward to this. It's very early stages. But I believe, and our team believes that we're going to have a very meaningful cycle in mobile led by these technology innovations.

[Christopher Rolland, Analyst at Susquehanna Financial Group]

Thank you very much for that. My next question is around Android. So, you talked about a couple of cool Android phones, Google, Samsung Galaxy M, Oppo. Can you point to any marquee sockets either new areas that you're playing or big chunky sockets? And then, just more generally, how would you describe the Android environment and kind of your outlook there and revenue contribution moving forward?

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Yeah. That's great. I mean, we are certainly engaged in Android, and most specifically, with Samsung and Google. There's some great products there. The Pixel phone is an amazing phone. There's other products as well. Great partnership with Google, actually. And the technology inside is very rich, very impactful. So, we should see more and more of that from Skyworks, probably less of the low end in China, of course, but the higher end in Android has been really powerful, and I think there's a lot more we can do from there.

[Christopher Rolland, Analyst at Susquehanna Financial Group]

Thanks, Liam. Appreciate it.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Sure.

[Operator]

Thank you. And our next question coming from the line of Craig Ellis with B. Riley Securities. Your line is open.

[Craig A. Ellis, Analyst at B. Riley Securities]

Yeah. Thanks for taking the question. And Liam, nice to hear the enthusiasm about a smartphone refresh cycle in the middle of the 5G cycle. I wanted to follow-up on that. So, as you look at the opportunity for AI to drive more up- and down-link content, increased carrier aggregation and some of the other technologies that the Company specializes in. Can you talk about the content gain opportunities that might exist in Gen 2 and Gen 3 smartphones? Because I think from commentary a quarter ago, we may not be looking at so much in this year's version of your largest customer handset, but what could we look at in coming years from AI on the content gain side?

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Yeah, I think, this is going to be a long, long run here and a successful run in the industry if the technology has come about the way that we see it. So, we have some of this technology in place right now, and we're able to capitalize on that. But this is going to be -- Chris [Phonetic], it's going to be a long-term cycle here. Very meaningful, akin to the first 5G cycle, my expectation. But I think it's going to be much more powerful.

The challenges are much more demanding, more challenging. Fortunately, for Skyworks, we can do a lot of this stuff in-house. Very difficult, but we can do it in-house, and we can craft and curate account by account to get it right, because we're not seeing one-fits-all here. This is going to be a customized platform when you get into AI, and each customer has its own needs and specs. So, it's early innings. The companies that are deeply involved are going to win. The customers that we pick are also going to be really important to us, but we're looking forward to it. And I think it's going to be a significant move in the industry, and certainly, for Skyworks.

[Craig A. Ellis, Analyst at B. Riley Securities]

Got it. And then, a two-part follow-up. The follow-up, specifically to the implications for revenue is, what does this mean for the Company to get back to the gross margins that it was executing at a couple of years ago in the 50% range and maybe even up to that 53% target?

And then, switching gears. The Company just continues to throw off tremendous cash. You talked about in your comments, the dividend just raised again. You have very little debt. How are you thinking about what happens next with cash return? Is it a lot more buyback or are you thinking about strategic M&A? And if so, what type of cards might you be thinking about playing there? Thank you.

[Kris Sennesael, Senior Vice President and Chief Financial Officer at Skyworks Solutions]

Yeah. So, maybe first on the gross margins, I think, already answered that question, right? I think we're going to continue to see further gross margins improvement. Obviously, with accelerated revenue growth, we will have better utilization in the factories. And that will exponentially result in further gross margins improvements. That is very clear.

As it relates to the financial output of this Company, it's just outstanding, right? Just if you look at in the first nine months of the fiscal year, we generated $1.3 billion of cash, that's a 40% free cash flow margin. I think that is outstanding in the semiconductor business compared to many of our peers and competitors. In addition to that, we have a strong balance sheet. We have almost $1.3 billion of cash on the balance sheet and only $1 billion of debt, with -- which is cheap debt with long maturities. So, we have a very strong position here, that allows us to, on one hand, continue to invest in our business, in our technology and product roadmaps, continue to invest in our factories, if and when needed. And so, currently, the capital intensity of the business has come down a lot. But if and when needed, of course, we can make those investments as well to maintain our leadership position.

And in addition to that, there's not going to be any hesitation. We are going to return all the excess cash flow back to the shareholders, and we do that consistently through our dividend program and our share buyback program. On the dividend program, we just announced a 3% increase up to $0.70 per share. Right now, that's translating into a 2.4% dividend yield. And as you noticed in the June quarter, we restarted the buyback program. And so, there's not going to be any hesitation to that. In addition to that, we still have optionality for M&A, right? But you know us. We're not going to do anything stupid. We're going to remain disciplined on that. And if there are no deals, we will return the cash flow.

[Craig A. Ellis, Analyst at B. Riley Securities]

Thanks for the help, guys.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Sure.

[Operator]

Thank you. And our next question coming from the line of Kevin Cassidy with Rosenblatt Securities. Your line is open.

[Kevin Cassidy, Analyst at Rosenblatt Securities]

Thanks for letting me ask a question. When you mentioned AI in the handsets, and I understand the improvement that you'll get in content, what about AI is moving out into all types of robotics and IoT type of products? Do you have accelerated opportunities with -- in that market, too?

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Great question. The good news is the technologies that we have can absolutely work in those environments. We just haven't gotten there yet. So, we're making those investments. Obviously, we've got a great position in smartphones and the technologies that we work there. But to take that through an IoT cycle across multi-markets is going to be a real powerful opportunity for Skyworks. The good news is we know what the technology, how they work, where they need to be. It's just about putting it together and getting into the right markets, the right partners.

But we really do believe this could be a very powerful cycle, independent of the smartphone, looking at the IoT opportunity. So, we look forward to it. It's a great question, and we'll hopefully update you more as we get more information. But we're very interested in making that happen. Thank you.

[Kevin Cassidy, Analyst at Rosenblatt Securities]

Okay. Yeah. Great. Thank you for asking -- or answering the question there. Just maybe as a hint. Do you need more scalability to be able to service more customers?

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Well, I mean, we have customers that are actually working with us and asking us how they can engage in AI and using IoT as a vector. And so, we're working with companies like that, that we know already, but there's a whole range of other opportunities and applications that we haven't yet addressed. So, I think it's going to be a meaningful part of the strategy at Skyworks here as we move forward with a lot of runway that hasn't been covered.

[Kevin Cassidy, Analyst at Rosenblatt Securities]

Okay. Great. Thank you.

[Operator]

Thank you. And our next question coming from the line of Quinn Bolton from Needham and Company. Your line is open.

[Nick Doyle, Analyst at Needham & Company LLC]

Hey, guys. This is Nick Doyle on for Quinn. If your largest customer switches to an internal modem, can you talk about how that change -- how that would impact Skyworks' content opportunity?

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Yeah, I hear you. We really can't go into specifics with that customer. But certainly, we have a great relationship. We're a trusted partner. There's a lot of opportunities that we can pursue, but we just really can't get into any details here.

[Nick Doyle, Analyst at Needham & Company LLC]

Okay. You mentioned that inventory remains elevated in the traditional data center and wireless infrastructure. Do you have a sense of how much inventory remains in days or dollars? And what types of products have the most inventory left?

[Kris Sennesael, Senior Vice President and Chief Financial Officer at Skyworks Solutions]

That is a -- that's really hard to answer that question. I mean, it really depends from end market to end market. As I said before, I think in consumer enterprise, it -- most of the inventory correction is over. Automotive, industrial, you've heard it from peers and competitors, there's definitely some excess inventory, that's being flushed out. And then, if you look more at the infrastructure, networking, data center, there is still some excess inventory, but the demand is definitely improving in those areas. And it will be a long recovery in those markets.

So, again, it really depends on end market to end market. But again, when you look at our broad markets business, we're growing it sequentially for three quarters in a row, and we'll start growing it on a year-over-year basis. And so, there's definitely some good traction for Skyworks.

[Nick Doyle, Analyst at Needham & Company LLC]

Thank you.

[Operator]

Thank you. And our next question coming from the line of Thomas O'Malley with Barclays. Your line is open.

[Thomas O'Malley, Analyst at Barclays]

Hey, guys. Thanks for taking my question. Mine was just a broader industry dynamic on integration. Competitor at their recent Analyst Day kind of showed a slide with the mid-, high-band socket, integrating diversity receive over time in high end Android. Could you talk about are you seeing integration in some of the design wins that you're competing for today?

And then, could you just maybe speak to the fact is that only going to appear in high end markets? Do you see that across broad markets? Just where you're seeing the industry move to in terms of maybe silicon getting integrated into smaller die space? Thank you.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

As you know, we really can't get into details with our customers and our design wins, but we certainly have the best-in-class RF technology and the manufacturing scale to compete to win for sockets. And frankly, the tech specs are getting harder and harder every year. On top of that, our customers are relentless in terms of driving higher levels of performance. And in this environment, only the strong will survive. And Skyworks, of course, this is what we do. This is our bread and butter. RF technology continues to get more and more difficult and that's the way we want it. And so, we expect more opportunities and more engagement, especially with the top-tier customers as we go forward.

[Thomas O'Malley, Analyst at Barclays]

Helpful. And then, just more broadly, when you talk about AI proliferating to the edge, I think, people have a general -- generally a good idea of how they see that playing out. But when it comes to AI in the smartphone, do you think you could talk specifically as to where you see the content uplift? Is that just additional bands? Is that additional filtering? Like, can you just point to where you think in the near-term you see additional content as it relates to AI in the smartphone? Thank you.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Yeah, I mean, just at the high level, think about transmit back and forth, right? Transmit and receive, the burden to be able to do that in an AI environment, the speeds, the latency, all of that, the filtering, the range, all of those issues become problems that need to be solved. And that's exactly what we want to do. And this is the stuff we do all the time. So, we're going to take all the know-how, our own IP, our technologists, our capital assets, our scale in our factories to curate solutions that will meet the demands of AI. So, it's not going to be a one-fits-all kind of thing. It's going to be highly curated and custom made.

[Operator]

Thank you. And lanes and gentlemen, that concludes today's question-and-answer session. I will now turn the call back over to Mr. Griffin for any closing comments.

[Liam K. Griffin, Chairman, Chief Executive Officer and President at Skyworks Solutions]

Thanks, everybody, for participating in today's call. We look forward to seeing you at upcoming investor conferences during the quarter. Thank you.

[Operator]

[Operator Closing Remarks]