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Robert Bruggeworth

Thanks, Doug.
Welcome everyone to our call. Qorvo delivered a strong March quarter with notable achievements in each of our operating segments. In ACG, we supported a critical new phone launch by our largest customer. Qorvo content in this highly anticipated model includes an envelope tracking power management solution custom developed for this customer over multiple years in support of their internal baseband.
Our envelope tracking roadmap represents a long-term content growth opportunity for Qorvo as our largest customers based on shipments expand. In HPA, we posted a record revenue quarter in our defense and aerospace business.
Strength was broad-based and included applications such as manned and drone-based airborne radar, space-based radar, SATCOM, EW, and missile defense systems. In CSG, we continue to increase our sales funnel of Ultra-Wideband opportunities. Our Ultra-Wideband sales funnel for automotive has grown more than $500 million over the last 12 months and now exceeds $2 billion. For fiscal year 2025, both CSG and HPA grew revenue double digits.
As we think about the business broadly, we are pleased to see the positive impact of our ongoing initiatives to improve performance. Our growth and margin targets are anchored in multi-year strategy focused on winning content with our largest customer.
Building on our core RF and power expertise to drive diversification through CSG and HPA and continuing to operate our business and manufacturing footprint in a disciplined and efficient manner. Key growth levers include continued momentum in defense and aerospace, expansion of our power management, and Ultra-Wideband businesses, and sustained content growth in flagship and premium mobile devices.
On the margin side, we are executing a clear set of actions. These include shifting away from legacy Android programs, scaling high-value products, And consolidating our manufacturing footprint in gas and in assembly and test, as well as the closure of our facility in Costa Rica, which Grant will discuss further in his remarks.
These moves are already yielding benefits and position us well for the future success across our operating segments.
Turning to our strategic highlights by market. In the automotive market, we began sampling a fully integrated Ultra-Wideband programmable SOC. This automotive qualified SOC addresses industry demand for highly accurate and reliable UWB technology in automotive applications such as secure keyless entry, child presence detection, kick sensors, and other precision short-range radar applications.
Also during the quarter, we significantly expanded our automotive connectivity footprint in Japan with a WiFi design win for the leading OEM and we expect first shipments to commence in calendar 2026.
In consumer markets, we ramp production of our first power management IC design win for a wearable. This Pemic optimizes charging for a smartwatch launching later this year. We also supplied a global manufacturer of power tools and outdoor power equipment with first samples of our battery management SOC leveraging embedded AI and machine learning algorithms to improve battery performance.
In collaboration with Nordic semiconductor, we announced the availability of an Aero-compliant smart lock reference design that combines BLE and Ultra-Wideband. The Aero protocol is backed by industry leaders and is expected to accelerate adoption by securing communication between smart locks and personal devices like smartphones and wearables.
Reference design combines a Qorvo Ultra-Wideband SOC enabling critical functionality like precision location and secure transaction with Nordics multi-protocol SOC. Leveraging AI trained algorithms and superior radar functionality enabled by our ultra wide front ends, consumer applications such as smart locks can establish and differentiate and user direction of travel and their intent to enhance security, safety, and efficiency.
We continue to support the migration to Wi-Fi 7 with front end winds spanning multiple years in routers, access points, and extenders. We also saw an increase in demand for our BAW filters across 2.4, 5, and 6 gigahertz for consumer and enterprise Wi-Fi markets.
Lastly, we've begun development for Wi-Fi front ends in alignment with market leading chipset providers. Turning to defense and aerospace, we achieved a record quarter and record fiscal year in D&A revenue. This is the third consecutive year of year-over-year revenue growth.
Qorvo is a leading supplier of high performance products and foundry services to the US government, defense crimes, and other global defense and aerospace customers. The sales funnel for our defense and aerospace business currently exceeds $5 billion and we see a path to scale this business both organically and inorganically to $1 billion annually.
During the quarter, Northrop Grumman recognized Qorvo as one of their top supplier partners at their supplier Excellence Awards. The award recognizes Qorvo for delivering US-based Baw filter technologies that enhance national security for the US and our allies. We're also recognized by BAE Systems for being a critical supplier for airborne electronic warfare and commercial airborne SATCOM applications.
Looking at our defense business broadly, governments around the world are allocating a higher percentage of GDP to defense spending. And Qorvo is critical to many of the highest priority programs. We view this as a multi-year tailwind to revenue and diversification.
Also during the quarter, we launched Next Generation Silicon, Ku-Band, SATCOM beamformer ICs for phase array-based SATCOM user terminals. There's robust demand for high-speed, reliable connectivity around the globe, and the SATCOM terminal market is expected to see very strong growth over the next several years.
In industrial and enterprise markets, customer demand continues to grow for Qorvo's data center power management ICs. We are leveraging our performance, leadership, and client SSDs as we pivot to higher value SSD opportunities in enterprise and AI data centers. We also began sampling our next generation motor drive SOC for industrial applications.
The motor drive SSD integrates our third generation microcontroller with our analog front end. Qorvo pioneered arm-based motor drive SSDs over a decade ago, and commercial availability of our newest offering is expected next year.
To continue growing our power franchise and deliver added flexibility to customer designs, we expanded our power management portfolio to include a brushless DC motor driver that pairs with a variety of MCUs and is optimized.
For a broad range of applications, including power and garden tools, drones, EVs, and e-bikes. Also during the quarter, customers leverage our ultrawide BNSOC to develop a range of monitoring, security, and radar-based fencing applications.
Qorvo's fully integrated ultra low power SSC contains RF processing, memory, and onboard software, and it's optimized to support a broad set of use cases. Radar-based applications include intrusion detection, gesture recognition, vital sign monitoring, and active monitoring and tracking of room occupancy.
Turning to infrastructure, inventories in our base station business have stabilized, and our customer demand for a small signal portfolio has strengthened. We're also in the early stages of DOCSIS 4.0 deployments, where Qorvo is a market leader. During the March quarter, we secured a new design with with a leading broadband supplier headquartered in Europe.
In Mobile, we expanded our opportunity and our largest customer beyond discrete components like tuners and integrated placements such as ultra high band pads with the production ramp of our envelope tracking power management solutions.
Qorvo played a critical role in supporting this customer's spring phone launch. Our ET solution is mated with their internal base band, and this represents a key design win and a durable multi-year content opportunity.
For our largest customer, we're doing what we said during our investor day, which is to invest more and win more. For the upcoming fall launch, we've been awarded design wins supporting greater than 10% year-over-year content growth, and we are addressing additional content in future programs over multiple years.
At our second largest smartphone customer, Qorvo design wins this year span our product portfolio. We are broadly represented in flagship and mid-tier smartphone launches, ramping now and in additional programs launching throughout the year.
Design wins in 2025 include low-band, mid-high band and ultra high band pads, as well as mid-high secondary transmit, antenna tuning, discrete filters, and Wi-Fi 7 fans. We also secured Wi-Fi 7 design wins in support of multiple Android smartphone OEMs, and we are engaged on Wi-Fi 8 development with mobile Wi-Fi chipset providers.
For Android OEMs based in China, shipments during the quarter supported 5G smartphones across the mid, premium, and flagship tiers. But we continue to shift mid-tier design wins customers awarded to Qorvo prior to our pivot. All 5G product development and ACG is focused exclusively on premium and flagship tiers.
In summary, we are seeing the positive effects of the actions taken to improve our performance. In HPA, a portion of the savings from our strategic exits of base stationams and silicon carbide is supporting growth in our defense and aerospace as well as our power management franchise.
In CSG we're leveraging decades of leadership in RF solutions, exceptional customer relationships and our core R&D to broaden and accelerate growth in automotive connectivity and SOCs for Ultra-Wideband and matter.
In ACG we've expanded our product portfolio for our largest customer with a successful ran of ET power management, and we expect to build upon this with greater than 10% year-over-year content growth in our largest customers all 2025 launch.
And with that, I'll turn the call over to Grant.

Grant Brown

Thanks, Bob, and good afternoon, everyone.
We delivered solid results for the March quarter, exceeding the midpoint of our guidance with revenue of $869 million and non-GAAP diluted earnings of $1.42 per share.
Similarly, non-GAAP gross margin of 45.9% and non-GAAP operating expenses of $247 million were also better than the midpoint of our guidance, reflecting continued cost discipline across COGS and OpEx, including recent restructuring actions.
In the March quarter, our largest customer represented approximately 43% of total revenue. For the full year of fiscal 2025, our two largest customers represented 47% and 10% respectively. For fiscal '25 in total, we achieved revenue of $3.7 billion and non-GAAP gross margin of 45.2%, up approximately 70 basis points compared to fiscal '24, which is consistent with our commentary last year when we guided to year-over-year improvement.
On the balance sheet as a quarter ends, we held approximately $1 billion in cash and equivalents. We currently have approximately $1.5 billion in long-term debt remaining and no near-term maturities. We ended the quarter with a net inventory balance of $641 million. This represents a decrease of $15 million sequentially and a decrease of $70 million on a year-over-year basis.
Turning to the cash flow statement in the fourth quarter, we generated operating cash flow of approximately $200 million and CapEx of $29 million which resulted in free cash flow of $171 million. For fiscal '25 in total, we generated free cash flow of $485 million returned over $350 million to shareholders via share repurchases, and retired over $400 million of debt.
Regarding our outlook for the current quarter, we are providing forward-looking quarterly guidance despite the continued uncertainty surrounding tariffs and broader macroeconomic conditions. Our view reflects numerous underlying assumptions, including those related to a dynamic global trade environment and ongoing supply chain challenges.
For reference, in our June quarter guidance, we have assumed a direct tariff-related impact of less than $1 million. This represents a historical run rate plus relevant new tariffs that will impact the quarter. Beyond the June quarter, if the 90-day pause is not extended, relevant exemptions expire, and other retaliatory tariffs become permanent, we expect the direct tariff impact could rise to high single digit millions per quarter in total across COGS, OpEx, and CapEx.
While the timing and scope of these changes remain uncertain, we are actively monitoring the situation, working closely with customers, and taking action to mitigate the impact. With that context, our expectations for the June quarter are as follows revenue of approximately $775 million plus or minus $25 million non-GAAP gross margin between 42% and 44%. And non-GAAP diluted EPS between $0.50 and $0.75.
As expressed during our previous call, the June quarter has multiple seasonal items to consider. June is the lowest seasonal quarter for our largest customer, and we are on the other side of the Galaxy ramp at Samsung.
Like prior years, our D&A business will be down sequentially in June due to program timing. However, given the strength in bookings activity, our expectations for revenue in the June quarter are higher than what we anticipated when we provided guidance last quarter.
We project non-GAAP operating expenses in the June quarter to be approximately $250 million. This includes other operating expense of $1 million to $2 million associated with the residual portions of our digital transformation project and other related items.
Below the operating income line, non-operating expense is expected to be between $10 million and $12 million, reflecting interest paid on our fixed rate debt offset by interest income earned on our cash balances, affects gains or losses, along with other items.
Our non-GAAP tax rate for fiscal '26 is expected to be between 18% and 19%. However, the impact of global minimum tax legislation for US-based companies under the new administration, as well as changes to international tax policy, remain uncertain.
Qorvo continues to execute on initiatives to improve revenue mix and gross margin with contributions anticipated from each business segment. Beginning with ACG, we expect to enhance margins and reduce variability as our portfolio management efforts and pricing strategies reduce our exposure to mass tier Android 5G. In HPA, the divestiture of our silicon carbide business is a margin, accretive move, as is the expected growth within D&A.
In CSG, gross margin will increase given the relocation of gas production to our high volume Oregon site, and we expect operating margin will continue to improve as our SOC and automotive connectivity businesses scale.
Additionally, we expect to expand gross margin in CSG as we transition our UWB products to external foundries from a 40 nanometer to a 22 nanometer production process.
Qorvo's manufacturing strategy is to internally produce only the most differentiated elements of our products to geographically align production with customers and suppliers and leverage the scale, capabilities and cost effectiveness of our outsourced partners.
For reference, over two-third of our production costs are external. This includes procured raw materials, wafers purchased from external foundries, as well as packaging, assembly and test services provided by our OSAT partners.
We continuously evaluate opportunities to reduce our capital intensity and product costs. As another step in this direction, we have decided to close our facility in Costa Rica to further consolidate our footprint and move closer to our customers and external manufacturing partners. The complexity of our solutions coupled with global RF compliance requirements and multi-year design cycles require considerable collaboration with our customers.
We are working closely with our customers and the team in Costa Rica to ensure a smooth transition and expect this action to be completed early next calendar year. Regarding operating expenses, as a part of our ongoing efforts to drive operational efficiency and align our cost structure with long-term strategic priorities, we executed a meaningful workforce reduction late last year.
This action was primarily focused on our mass market Android business and the related corporate support functions. In parallel, we streamlined our digital transformation efforts, canceling elements of the project to ensure the scope aligns with the anticipated economic benefits.
Finally, we sold our silicon carbide business, which will be accreted to both growth and operating margins in fiscal '26. We remain committed to optimizing our portfolio and regularly evaluate each of our investment areas. Where businesses do not meet our financial or strategic objectives, we will continue to act decisively, whether through divestiture or exit to focus our resources on core high performing areas.
We're confident that the steps we are taking today across our product portfolio, business segments, and manufacturing footprint enable us to expand growth, profitability, and diversification. We're reducing capital intensity and focusing our internal production only where it differentiates our products. The benefits of these strategic actions will become increasingly evident as we advance through fiscal '26 and into fiscal '27.
Before we open up the call for questions, I'd like to reiterate that the purpose of today's call is to discuss our fourth quarter results and outlook. We appreciate you keeping your questions focused on those topics. At this time, please open the line for questions.

Question and Answer Session

Operator

(Operator Instructions)
Thomas O’Malley, Barclays.

Thomas O’Malley

Hey, guys, thanks for taking my question and congrats on the nice results. I wanted to ask about the commentary on content with the largest smartphone customer. Obviously, that's a really nice forecast for the year.
Could you talk about, things that are driving that obviously you have an ET chip that's coming into play, but also you would be concerned in like a broader environment that there may be pricing headwinds. Maybe just broadly, can you talk about your Largest customers and if you're facing any sort of pricing squeeze over the next couple of quarters or if you're able to offset that in any way, I just want to understand the context there?

Robert Bruggeworth

Sure, thanks, Tom. I think we'll go ahead and let Frank Stewart who runs the business go ahead and answer your question for you.

Frank Stewart

Yeah, so, hey Tom, maybe I'll start with the largest customer side of your questions. So yeah, we're really excited about the fall launch upcoming, really proud of what the team accomplished and capturing content there across multiple product categories. It covers things that you know well, antenna tuning and switches. We've added filters there.
We've continued to be strong in our ultra high band content and as we talked about for the spring launch, we're going to enjoy some envelope tracking content in those models as well.

Robert Bruggeworth

They don't talk about how things going to Samsung as well.

Frank Stewart

Yeah, and I think Tom asked about pricing too. I mean, so we, we've talked a lot about what's been going on in the mass here and the challenges that we face there, so we, we've been, exiting that part of the business. We still see in that premium flagship here it's about performance and that's where we're competing.
And so like Bob mentioned on the call, we had some nice content in the, in our Galaxy S25 ram. Still some phones coming in that platform that are yet to ramp. And then we talked last quarter, I think about our content in the second half flagships.
This is kind of a flip and fold and Fan edition type models and we had pretty low content last year. We said we were going to win that back and we have so we had, less than $1 of content last year and we've got multiple dollars of contents very similar to what we have in the S25 ramping in the second half of the year, so we feel pretty good about our position there.

Thomas O’Malley

Super helpful on the color. Just on the fiscal year you guys had kind of previously talked about a little bit of a decline. So one side of things, it sounds like, you're seeing some real strength and then on the Android side, you're obviously being more strategic in where you invest.
If you look at like the cadence for the year. Which is something that I think, is a little difficult to kind of model and look at how fast should we be seeing Android fall off just because it looks like in the March quarter, you actually had a little bit of an uptick there. Is that, last time buys, and then how quickly is that going to fall off throughout the year?

Robert Bruggeworth

Thanks, Tom. This is Bob. Actually, we're going to see a little bit of an uptick, this quarter in June, which is typically consistent with the last three years. We typically see Android up as a percent of sales in our business and it's going to be up slightly in dollars. But, it's going to depending on what new phones that are launched that we're in and, the decline in some of the master phones are ramping down, and we're also, we're enjoying good business.
We talked about some of the US customers, that being Google, obviously, we're doing well there as they ramp, Dave mentioned other phones, so it has all to do with the timing of new phones and how well they sell, but it is going to decline year-over-year, as we said. We're not backing away from that change.

Thomas O’Malley

Thank you guys.

Operator

Harsh Kumar, Piper Sandler.

Harsh Kumar

Yeah, hey guys, congratulations also on very nice quarter and resolve. Bob, maybe you could clarify something for us. You mentioned that you want an ET solution, on the internal base ban for a customer. Are you sharing this with somebody? And then secondly, you also talked about, sort of a nice double digit kind of content increase.
So is the content increase coming because the base brand is moving to other models or is it coming because you're also, winning stuff across the Board and other categories as well? Just and then I will follow up.

Robert Bruggeworth

Yeah, thanks, Harsh. I'll go ahead and take the second question. I mean, as Frank's already outlined, we picked up some share in a number of different buckets, so we'll start there. And ET PMIC we are sole source. We've been sole sourced when that At first, the base band started at Infineon that they use, then it went to Intel, and now it's the inner modem.
So we continue to be sole sourced. It's a highly iterative process. They're very integral to work with the base band. And as and I'll just use Qualcomm as an example, they were very tightly coupled with their own ET PIMIC and it's the same way with the space band.

Grant Brown

Understood, thank you. And then, Bob, another clarification, I guess curious what you're seeing with your largest customers. There's been a lot of reports of pull forward companies, I don't blame them, but a lot of companies are doing stuff to avoid tariffs.
I guess curious if you are seeing that and you think your results are reflecting that. And if that's the case, when do you think you go back to normal or maybe you're not seeing it? I'd just love to to understand what's happening.

Robert Bruggeworth

Yeah, I think one thing that people need to keep in mind here is they did launch a spring phone which they typically don't. And when you launch a new phone, you typically produce more to go ahead and stock your channels, so you get ready for the sell through and we're expecting that to come down next quarter, which is typical when you launch a new phone.
So from that perspective, it's pretty normal and when I look at the overall business. We some things move in the quarters, some things move up the quarter, kind of normal, so I'll stop there harsh. I mean, we're not seeing anything massive moving one way or another right now.

Grant Brown

Yeah, no, I would reiterate that. I think we've seen some modest activity. It's only notable in light of the tariff environment but not meaningful in terms of dollars, primarily smartphones generally, but nothing that suggests customers are overreacting and in terms of pushing or excuse me, pushouts or pull-ins in every quarter, so nothing abnormal there.

Harsh Kumar

Appreciate it guys. Congrats again.

Operator

Chris Caso, Wolfe Research.

Chris Caso

Yes, thank you.
Good evening. I guess the first question is regarding some of your comments about the direct tariff impact if if things aren't positive, you talked about high single digit millions. Can you detail a little bit more of what your assumptions are behind that?
What do you mean by that? And just in general, there's a lot of uncertainty with tariffs in the US, there's some concern about, what tariffs may be charged and what might be paused going into China. Can you just kind of update us on your position and what your assumptions are right now?

Grant Brown

Hey Chris, this is Grant. Let me spend some time on this one because I think it's an important question, the first part of it there is the assumptions themselves, at least in the high single digit million. I wouldn't necessarily think of us as, anticipating any twists or turns in the tariff environment. It's probably unknowable, but you could think of if all the worst things that we know of today would work against us, that would be how we would size it.
It's an unlikely scenario, but wanted to highlight just, in the grand scheme of things, how small the overall impact could be and maybe on that front, how we think about the tariff environment, it does remain dynamic and unpredictable, but, I can start there and then, we could talk a little bit about how we're managing it.
We've had mitigation measures in place for quite a number of years and today we continue to leverage the same tools, but again, the situation is fluid as we pointed out in my prepared remarks in the June quarter, we've got about a million dollars there or less than that and it Represents a historical run rate plus some of the new tariffs that are relevant in the quarter that's across all of COGS, OpEx and CapEx.
So it's probably better than fear, they're complex as the, what goods they apply to how they're calculated, and who pays them, all depends on the countries involved, the nature of the products, and relevant commercial terms so it's specific to any given company.
Regardless, you should know that we're not disadvantaged due to our geographic presence. We have a hybrid manufacturing footprint, multiple qualified flows, and a lot of flexibility in how we serve our customers. But, that said, maybe a little bit of detail, I could break it into maybe four categories for you.
The first would be US to US where a meaningful amount of our revenue comes from products that we manufacture in the US and then we sell to US customers. Our defense business is a good example of that, and it's sizable.
It has some exposure related to input costs such as aluminium, but generally very little tariff exposure. The international to US, in that case, there isn't much product that comes back into the US that's subject to tariffs. However, tariffs do increase the acquisition cost for factory equipment. So in that particular scenario, the impact is largely CapEx related.
In an international to international scenario, we generate revenue from products that are built and sold outside the US. So for example, our tuners and ET PIMIC makes are fabbed at non-US silicon foundries and then sold to international customers and contract manufacturers. So that's a good example of things that that are on that international to international exposure.
And then lastly, probably the most misunderstood is the US to international category. In this case, our integrated module business is a good example. We produce intermediate goods such as wafers that contain our filters and PAs at our US facilities, and then we ship those to bonded free trade zones. Once in Asia, ROA partners integrate, those with a considerable amount of other content, non-US components such as laminate capacitors, etc.
The bill of material contains dozens and dozens of components and they substantially transform those raw materials into some finished goods. So that when the card is actually built during assembly, that is where we, the substantial transformation occurs in the country of origin is designated.
So we're actually, made in China, sold in China, if you will, so there's no noticeable impact. Obviously the tariffs are complicated and we're managing it, but I think it comes down to each company's particular circumstances, the overall impact being generally small today.
Obviously there could be some broader demand-related impacts, but, just insofar as the direct impacts, I think that helps shape Qorvo's exposure for you. We have a lot of options and flexibility and we'll continue to leverage those.

Chris Caso

That's very helpful and thank you very much for the detailed answer. For my follow up, I guess I wanted to get to the fiscal '26 guidance, and you had mentioned, so, and I guess perhaps it wasn't guidance, but it was, some indication of, kind of flat revenue, 150 basis points, gross margin expansion in the current environment is that still, a good model for us to follow?

Grant Brown

Sure, I'll take that one too, it's probably worth reflecting on it. I'm not going to restate it here, what we said last quarter, but we didn't have overly ambitious forecasts to begin with. So we're making substantive changes to our business this year in fiscal '26, and our commentary has reflected that. We've removed Base Station BOM Silicon Carbide business we've sold and we're exiting $150 million to $200 million worth of lower margin Android business.
So we're making some substantive changes. I mean, if you think of the drivers on the year. D&A is arguably cyclical, but far less correlated to the macroeconomy than perhaps consumer related in markets. Similarly, we're seeing the content that Frank talked about at our largest customer growing over 10% and added a new revenue category there with the ET PIMIC.
So there's some secular trends here that that we're still seeing that that helped buoy our our perspective on the year, all that said though, we're repositioning the business for long-term success. So fiscal '26 is really more about execution and margin improvement to create diversification opportunities outside of mobile where we're on track.
We haven't seen anything that materially changes our forward view, but acknowledge that there are potential for indirect tariff impacts. I mean, in the meantime, we'll just continue to issue quarter by quarter guidance incorporating all that we know at the time it's issued and executing on the things that are under our control to drive those financial results we talked about last quarter.

Chris Caso

Got it. Thank you.

Operator

Karl Ackerman, BNP Paribas.

Karl Ackerman

Yes, thank you. I have two, please. First, is your content growth with the largest customer coming from, your attached rate on their own base band or you're also seeing content on third party base bands as well? I have a follow up.

Steven Creviston

Yeah, hi, this is Frank again. Both, the team did a good job of succeeding on content across the Board. So I think we've been clear that when it comes to our ET team, that is, unique to the internal base band, but the content that we captured on all the other product categories mentioned is broad-based across both.

Karl Ackerman

Helpful, thank you.
And then second, where are you on working through previously under absorbed inventory? And do you foresee tariffs, to impact your China-based demand, and I suppose if demand were to moderate, is the margin associated with, the China-based demand higher than corporate averages? So if you could just follow up on that'd be great.

Robert Bruggeworth

Well, we've actually made really good progress bringing down our inventory overall. So, very proud of that. It's unlocking some free cash flow for us. I think it's been a positive trend for us. We didn't overbuild, we, brought utilization down very quickly, quite some number of quarters ago in order to react to it, and we've worked through the inventory levels, successfully.
So we don't see anything abnormal from an inventory perspective, or expect there to be a noticeable impact at this point.

Karl Ackerman

Thank you.

Operator

Srini Pajjuri, Raymond James.

Srini Pajjuri

Thank you. First, the clarification, and then I have a question on the clarification. You talked about the $150 million to $200 million headwind from exiting the Android, I think low end Android last quarter. Is that still on track? Are you track better or worse? If you can clarify that, then I have a question.

Robert Bruggeworth

Yeah, thanks, sweetie. It's on track, playing out as we expected.

Srini Pajjuri

Okay, thank you. And then Bob, on the D&A, it looks like the business has been faring quite well, and some of the trends that you highlighted make a lot of sense.
You also talked about, potentially getting to a $1 billion annual run rate. Could you give us maybe some color as to where the business is today in terms of run rate? And then also, in terms of, product categories and maybe, geographic exposure, if you could give us, because we don't get a lot of details on this business, so I think any color on the business would be helpful in terms of the growth drivers.

Philip Chesley

Actually this is Phillip I you know I'll maybe dive into that a little bit as well. So, I think, kind of break down your questions here. So I think, Bob said in his prepared remarks that we have over a $5 billion design wind funnel right now and, we size the business, I believe it was last quarter or so at around $400 million. You know, when you look at our design win funnel, it really is broken pretty evenly between the big in market segments that we kind of play in today.
And if you look at that's, radar comms, electronic warfare with our solid state TA technology that we have, which is high power RF, space and satellite-based comms, SATCOM differentiating that between space-based, more ground-based, kind of SATCOM terminal business and as well as missile applications, whether that's traditional, hypersonic, so.
We touch a lot, and most of the segments, in the D&A space. And so, when you look at When you look at where we're winning, it's really driven around, this big upgrade cycle that we've been seeing for a while, right? And we, we've talked about it at Investor Day where, whether it's an old, an older asset, whether that's a ship or a plane, it needs upgraded radar capability, whether it's a new system, I mean, they just announced the F-47 as an example, right?
And so that's going to require a lot of advanced radar platforms that, is right technologies that, is what we provide. So. You look at that, the other thing I would say is that, the DOD, hasn't approved, continued resolution right now for FY '25.
If you look at where that is focused, that's focused on deterring China that's focused on deterring China, that's focused on alternative GPS, that's focused on, UAVs, all segments where we play and have, wins in big programs that we can't mention them all, we're under contract like I can't give specifics. The other thing that gets me excited as well, you look at the budget for FY '26, they've already are talking about $150 billion worth of additions over the next few years, to really beef up, advanced technology platforms here in the US.
And then I think one of the things that we have in size, because it's relatively new, you look at the foreign military sales and what's happening in Europe with their, kind of rebuilding of their military capability.
You know what I'm hearing talked about is that that's a $1 trillion opportunity upgrade over the next few years, over the next 5 to 10 years as they do that. So, today we have, I would say, a meaningful of our revenue and D&A that that's foreign military sales. We're engaged with every one of the key customers in Europe in particular, but not just Europe, outside of Europe as well.
And I think the last thing that I would, well, two last things I'd leave you with one is that. The other area that I think is exciting is you see a lot of these what I call new tech defense players. I won't list them by name, but there's a lot of, new Silicon Valley entrants that are coming in and coming in with new technologies that they're trying to move faster than what they ever have, and we have have really strong partnerships, with those, customers and so I think that's big for us.
Last thing I would say and again I'm saying this because we don't get to talk about this a lot, is that I want to remind everyone Qorvo is really unique in the space. We have all, most of the key RF technologies on shore that are needed for these platforms, whether that's [GA], whether that's gas, beam forming through our innocu acquisition, Baw filters, low frequency, high frequency, high power solid state PAs.
They're critical for electronic warfare applications and we have that advanced art packaging and I can't think of a single other company out there that has all of that in one place, and I think that's why you see such, excitement around it and our funnel really accelerating, over the last, a year or so.

Srini Pajjuri

Thanks Phil. Very detailed. I appreciate it.

Operator

Edward Snyder, Charter Equity Research. Please go ahead

Edward Snyder

Thanks a lot, Grant, based on the number you just gave for your largest customer in the fiscal year, it looks like you were flat year-over-year in total revenue, we can talk different unit volumes, et cetera, but it kind of speaks to maybe -- I know you've gotten some contract gains on the last fall's phone, but it doesn't seem like you got a lot of boost from the spring phone. So one, I want to get your feeling on will the content gains material in unit volume is just weak or why we seeing it kind of flat? And then secondarily, based on -- even our tear down, it looks like your content might have been a little bit light. Without the ET PIMIC, it would have been light on the spring fall, with ET PIMIC, it looks about even maybe still a little bit down. Is that a correct assessment?
And is that the baseline we should expect from the internal modem phone for next -- for this year or next year? And then I have a follow-up.

Frank Stewart

Yes, this is Frank. Maybe let me take the last one with respect to the 16e that was just released. Maybe I could clarify that is definitely what I would consider one of their consumer SKUs. And we've got different content across different phone types. But for a consumer SKU for Qorvo.
That was actually a pretty good phone for us. We're pretty happy with our dollar content there. So maybe that's the first clarification. I'll let you do your follow-on question, but I've got some more thoughts for you that I'm guessing will correlate.

Edward Snyder

And then in terms of tariffs, you had several module houses, correct me if I'm wrong, but in your latest filings, you had module assembly in Costa Rica, Korea, Germany and China. You closed Costa Rica to consolidate. I understand that's an old facility. Does that mean most of this stuff will shift to Asia? Or are you going to try to distribute, how are you working that business?
Because that seems to be a critical factor in determining where the tariffs are going to wind up in the end.

Robert Bruggeworth

And this is Bob. I want to make sure we're clear. What was done in Costa Rica was really the filter technologies there, the final, we'll call it back-end packaging. There, which is then shift to our module manufacturers, whether they're in China or Vietnam or wherever they are in the world. So we are moving that to Asia.
And in Germany, that doesn't build modules, that builds product for us, the CATV line amplifiers, which is nothing like anything in mobile. So I just want to make sure we're clear on those factories, do not build modules, Costa Rica nor Germany.

Grant Brown

And and maybe just to follow up on your question regarding Asia we have multiple flows for a number of these products as well as, multiple partners that we can use. So, depending on, the optimal structure and we'll work that with our suppliers and partners, we have a lot of options and flexibility as it relates to tariffs.

Frank Stewart

Ed, if I could, this is Frank. I was going to circle back to answer what might have been your broader question. Maybe to give as much color as I can at our largest customer. There's actually multiple product types where there's two suppliers that share content when they service that customer in Qorvo, for example, our antenna tuning, maybe just to clarify on that topic, Qorvo has actually shared that antenna tuning content with another supplier for a number of years, actually going all the way back to 2020.
It's the same situation we have for ultra high band. It's a similar situation we have for discrete filters where Qorvo has shared content with some other supplier for multiple generations. So if you think within that environment, so within that environment that we've been in for multiple years, as we said before, Qorvo is on track to capture greater than 10% content upside in this year, this fall model. So that's something we're really excited about. And then when you look forward, we see a similar environment going forward that I just described.
And in that environment, we're excited about the additional content that we're working again there.

Edward Snyder

I understand it's very difficult to predict because of the wackiness of this year and next year in terms of having two phones and that sort of thing too. But your 10% content increase year-over-year, can you just maybe give us a little bit of idea how that -- what assumption you're using in terms of split between internal versus, say, the Qualcomm in the fall that drives you that number?

Robert Bruggeworth

Yes. This is Bob. My usual line when we get this place is we don't comment on future architectures. Obviously, we know it because we have to build to it, but it's not something we can comment on here.

Edward Snyder

Okay, thanks guys.

Operator

Gary Mobley, Loop Capital.

Gary Mobley

Hey guys, Most of the juicy topics have been addressed [indiscernible]. Do you still feel comfortable with the HPA and CSG businesses growing double-digit percent in fiscal year '26. And within those two segments, how much business would you characterize as maybe being classically cyclical or subject to ebbs and flows in the distribution of customer inventory and on that specific front, are you seeing any sort of green shoots in terms of order and backlog fill?

Robert Bruggeworth

Gary, you were pretty choppy. Let me first start with -- I believe your first question was our outlook for HPA and CSG growing double digits this year, the answer is yes. The second part, I'm not sure we totally understood. We're not counting on any inventory builds or anything like that at customers. This is -- we're in the right places.
Philip has done a great job talking about D&A. I'll let Eric talk a little bit about CSG and where we're seeing growth this year.

Steven Creviston

Sure. Sure. So in CSG, of course, the largest revenue segment today is WiFi, in particular, high-performance WiFi transitioning 6 to 7 and already be getting R&D on 8. So that's got dollar content growth just as we've seen in multiple generations of cellular and RF. And I think that's moving at a pretty high velocity.
So we're filling channel right to demand and demand is moving out for new base stations and WiFi access points for industrial and enterprise and so forth. So that's sort of the largest segment.
It's certainly got growth opportunity with content. And then, of course, most of the investments going into the SoC business and the sensor business today. In the SoC business, we're looking at a BLE matter as well as ultra-wideband, both experiencing really rapid growth relative to our average. I've been particularly excited actually about the matter growth opportunity. We're not the first in that space, but we've got some unique capability we're bringing to it, a design traction and even volume ramping is going very well.
Ultra-wideband, of course, we are a leader in technology there.
Automotive has gotten very, very strong for us in terms of designing, takes quite a while, of course, to get that to production revenue. But once we do, we'll be running for many years and that we're engaged across a number of very large opportunities and it's going very well in auto. But then also ultra-wideband, I think we're leading in the other applications, in particular, connected home applications. We've got a lot of opportunity there. And also in other sort of lighting applications, as we mentioned, with Matter.
So really across the board, a lot of opportunities driving these new technologies, the wheel has just beginning to spin and pickup momentum here.

Dave Fullwood

And the other, Eric is the indoor location and real-time location services, we talked about that, ramping. So that is ramping now. It takes time. You know the market takes awhile to develop, but that will start to build on itself as we had previous fiscal year and in the next couple of years.

Gary Mobley

You thank you for that and Grant, just a quick follow-up. Are you still expecting OpEx to hover at $250 million per quarter level for the balance of fiscal year '26.

Grant Brown

I think you're referring to maybe our guidance for the year, quarterly for OpEx at $250 million. We still believe that's a reasonable threshold, plus or minus 2%, 3%, maybe there's a seasonal impact. There's potentially other items in there. I'd call out the weakness in the U.S. dollar is one that works against us and so far is our OpEx, again, not necessarily meaningful on a normal basis, but should it continue to weaken significantly, that could add to OpEx and other seasonal factors.
But generally, that's a good working assumption at the baseline. Thank you.

Operator

Timothy Arcuri, UBS.

Thank you. This is (inaudible) for Tim. Guys, I just wanted to ask about tariffs impact and you mentioned taking steps to limit the impact. But can you talk about exactly what is it that you're doing? We know you benefit from tariff free zones in China, but what exactly are you doing to limit the impact here?

Grant Brown

Yes, sure. So I mean we have a pretty experienced team, right? I mean go all the way back to Huawei (inaudible) 00:54:13 and there were similar dynamics in play there. We successfully navigated those challenges before and we identified the same solutions that are being used and have been for quite some time, will continue to use. So we'll optimize around those.
We have flexibility in our supply chain.
We've alternative second sources. We've been collaborating with customers on their mitigation strategies and the locations where they work and produce their own products. But at the end of the day, I think it really comes down to the country of origin question, right? I mean we have a substantial transformation in the parts when they're built, assembled and tested in China and sold to Chinese OEMs or contract manufacturers. So there's -- I think, probably misunderstood but a really key element of what's going on here.

Got it. Okay. And then just one quick one, I just want to double-click again on the demand pull-in point that was made previously on the call, but in the context of your guidance. So how much of the demand into the June quarter in your view could be related to tariffs?

Grant Brown

This is Grant. Let me take that one. I think what you're alluding to maybe is some pull-ins related to tariff activity. I mean like we had commented, we've seen modest activity. It's only notable in the light of the tariff discussion, but it's not meaningful in terms of dollars.
It's largely smartphones and we're not seeing any customers overreacting pull-ins and push-outs occur every quarter. So it's relatively normal. I don't know, Dave, if you have any?

Frank Stewart

Yes. I can shed some light, too, in particular with some of our customers in China. Of course, initially, when all this stuff gets announced, it creates a bit of panic and people just don't understand how things are going to work, right? And so we get on calls and we kind of work through our supply chain, their supply chain and what are the real risks and whether they can be mitigated or not.
And so I can tell you that a lot of that activity has died down, right? People really start to understand the situation, really understand what Grant described in terms of how country of origin is determined, all that activity kind of starts to fade away. And so then the motivation to change their demand profile goes away as well. So that's kind of what we're seeing play out.

Thanks guys, it's very.

Operator

We'll take that as the last question for today. And this concludes our question-and-answer session. I would now like to turn the conference back over to the management for closing remarks.

Robert Bruggeworth

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

Operator

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