Qorvo, Inc. · NASDAQ:QRVO
Qorvo — Investor Day (May 2018)
98 slides from Qorvo's investor day presentation, May 23, 2018
Slide 1: Investor Day | May 23, 2018
Investor Day | May 23, 2018 © Qorvo, Inc. 1
Slide 2: Doug DeLieto, Vice President, Investor Relations
Doug DeLieto Vice President, Investor Relations © Qorvo, Inc. 2
Slide 3: Safe Harbor
Safe Harbor Forward-looking statements This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objec
Slide 4: Agenda
Agenda Bob Bruggeworth Overview 8:30 am James Klein Infrastructure & Defense 8:35 am Cees Links Internet of Things 9:00 am Break 9:25 am Eric Creviston Mobile Products 9:40 am Todd Gillenwater Mobile Technology 10:05 am Steve Grant Operations 10:20 am Mark Murphy Financials 10:40 am Q&A 10:50 am © Q
Slide 5: Bob Bruggeworth, President and CEO
Bob Bruggeworth President and CEO © Qorvo, Inc. 5
Slide 6: Connectivity is Changing Lives
Connectivity is Changing Lives © Qorvo, Inc. 6
Slide 7: Qorvo is Uniquely Positioned to Lead
Qorvo is Uniquely Positioned to Lead Clear Premier Operational Market Focus Technology Portfolio Excellence Scale CA BAW SOI GaAs Culture Capital of Lean Efficiency Clean GaN ET Adv Pkg Launch © Qorvo, Inc. 7
Slide 8: Clear Market Focus
Clear Market Focus Targeting the highest growth, most complex opportunities IDP Mobile Products Source: Qorvo and Industry Estimates © Qorvo, Inc. 8
Slide 9: Premier Technology Portfolio
Premier Technology Portfolio Product and technology leadership where performance matters Envelope BAW & TC- Gallium Gallium Advanced SOI Tracking SAW Filters Arsenide Nitride Packaging (ET) CA Spectral Signal routing High efficiency High power Extended Functional Efficiency and tuning amplification
Slide 10: Operational Excellence
Operational Excellence R&D Clean Culture Effectiveness Launch of Lean World Class Operational Capital Customer Service Scale Efficiency © Qorvo, Inc. 10
Slide 11: Putting It All Together To Win
Putting It All Together To Win Creating value through growth, expanding margins, increasing FCF Core enabling Target the highest Production ramp technologies growth segments excellence Multiple long-term Win the most complex growth drivers opportunities © Qorvo, Inc. 11
Slide 12: Another strong year for IDP
Another strong year for IDP IDP Sales Conference 2018 [ Photo of Bob Bruggeworth and James Klein shaking hands ] © Qorvo, Inc. 12
Slide 13: Infrastructure & Defense Products
Infrastructure & Defense Products James Klein, President © Qorvo, Inc. 13
Slide 14: Leading in Markets that Connect & Protect
Leading in Markets that Connect & Protect™ © Qorvo, Inc. 14
Slide 15: Optimized for Growth & Value Creation
Optimized for Growth & Value Creation Diversified 10-15% Markets CAGR Investing to Lead GaN IoT © Qorvo, Inc. 15
Slide 16: Robust Underlying Markets
Robust Underlying Markets Foundation for growth $8.0 B Base Station $7.0 B $6.0 B IoT $5.0 B Optical $4.0 B Broadband $3.0 B $2.0 B Defense $1.0 B Other $0.0 B 2017 2018 2019 2020 2021 2022 Source: Qorvo and Industry Estimates © Qorvo, Inc. 16
Slide 17: IDP Strategy
IDP Strategy Driving sustainable growth Partner with the Diversify into Supplement growth best in industry new markets through acquisitions Advance technology Develop market leadership shaping products © Qorvo, Inc. 17
Slide 18: Partnering with Industry Leaders
Partnering with Industry Leaders © Qorvo, Inc. 18
Slide 19: Key Technology Advantages
Key Technology Advantages World Value Industry’s leading class packaging, Integration Creation semiconductor assembly technologies & test GaAs, GaN, Overmold, Hardware, BAW, TC-SAW, Air Cavity, LCOR, Firmware & SOI, SiGe, High Speed Application CMOS Test Solutions Software 2017 © Qorvo, Inc. 19
Slide 20: Diversification
Diversification Balanced growth & profitability >5,000 CUSTOMERS None Greater than 10% Stability & Predictability >6,000 6 MARKETS PRODUCTS Balanced & Growing Broadest in the Industry © Qorvo, Inc. 20
Slide 21: Product Development Engine
Product Development Engine 122 best-in-class products released last year Embedded Computing Design’s Qorvo and D-Link collaborate to deliver most innovative silicon product enhanced Wi-Fi coverage via mesh in 2017, for multiprotocol & networks “recognized in our market for ultra-low power capability
Slide 22: Optimized for Growth & Value Creation
Optimized for Growth & Value Creation Diversified Markets Investing to Lead GaN IoT © Qorvo, Inc. 22
Slide 23: GaN Adoption Accelerating
GaN Adoption Accelerating Customers are demanding improved performance $2.0 B $1.5 B Base Station CAGR 55% Broadband $1.0 B CAGR 5% Defense CAGR 24% $0.5 B $0.0 B 2017 2018 2019 2020 2021 2022 Source: Qorvo and Industry Estimates © Qorvo, Inc. 23
Slide 24: Why GaN?
Why GaN? GaN provides clear customer value Customers Need… GaN Solutions Provide… Lower Operating Cost Lower Power Consumption Lower Capital Cost Higher Power Density & Smaller Arrays Reliability 100x Longer Life Higher Data Throughput M-MIMO, Broad Bandwidth & Higher Frequency © Qorvo, Inc. 24
Slide 25: Qorvo is Leading in GaN
Qorvo is Leading in GaN Continued success as markets expand INNOVATION SOLUTIONS SCALE POSITION • GaN pioneer • Broadest portfolio: • >9 million products • Top 3 supplier in since 1998 20 MHz to 100 GHz shipped each segment • Continued investment • >60 GaN products • Manufacturing scale to • Trusted
Slide 26: Base Station Market Opportunity
Base Station Market Opportunity 5G is here today… 5G mmW $1.6 B FEM CAGR 119% $1.2 B 5G <6 GHz M-MIMO PA CAGR 135% $0.8 B 4G Macro GaN PA CAGR 33% $0.4 B 4G/5G Small Signal CAGR 16% $0.0 B 2017 2018 2019 2020 2021 2022 Source: Qorvo and Industry Estimates © Qorvo, Inc. 26
Slide 27: 5G Infrastructure Customer Needs
5G Infrastructure Customer Needs Customer needs align to Qorvo strengths Customers Need… Qorvo Solutions Provide… New Frequency Bands Largest 3-6 GHz Portfolio; 28 and 39 GHz FEMs Small Form Factors Technology-optimized Integrated Solutions Lower Capital Costs Integrated Multichannel Modules Lower P
Slide 28: GaN Advantages for mmW 5G Infrastructure
GaN Advantages for mmW 5G Infrastructure Simplifies base station architecture SiGe Only GaN-based MIMO Antenna MIMO Antenna 16.5 cm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40% Less Power Consumed 12.5 cm 40% Power Reduction 94% Smaller Die Area 4.5 cm 16.5 cm 94
Slide 29: Industry First 5G GaN FEMs
Industry First 5G GaN FEMs Commercial solutions for 28 GHz and 39 GHz 28 GHz 39 GHz QPF4001/4002 QPF4005/4006 Rx Noise Figure 3.5 dB Rx Noise Figure 4.2 dB Rx Small Signal Gain 18 dB Rx Small Signal Gain 18 dB Tx Small Signal Gain 25 dB Tx Small Signal Gain 23 dB Tx Saturated Power 30/33 dBm Tx Satu
Slide 30: Qorvo is Leading in 5G
Qorvo is Leading in 5G Broad portfolio of validated solutions INNOVATION SOLUTIONS SCALE POSITION • GaN, BAW, GaAs, • Broad RF portfolio • > 150 million base • Strong customer SOI, SiGe supporting all 5G station modules relationships frequency bands shipped per year • Packaged module • Leading share
Slide 31: Optimized for Growth & Value Creation
Optimized for Growth & Value Creation Diversified Markets Investing to Lead GaN IoT © Qorvo, Inc. 31
Slide 32: IoT
IoT Cees Links, GM Wireless Connectivity © Qorvo, Inc. 32
Slide 33: The Connected World of IoT
The Connected World of IoT Opportunities abound Rapidly Growing Market +100s more Multiple Standards Diverse Applications +100s more © Qorvo, Inc. 33
Slide 34: IoT RF Opportunity
IoT RF Opportunity Strong growth across multiple market segments $4.0 B $3.5 B Short Range $3.0 B CAGR 41% $2.5 B $2.0 B Local Access CAGR 10% $1.5 B $1.0 B Wide Area CAGR 40% $0.5 B $0.0 B 2017 2018 2019 2020 2021 2022 Source: Qorvo and Industry Estimates © Qorvo, Inc. 34
Slide 35: Appetite for Data
Appetite for Data Driving the need for higher throughput .11ay Gaming VR 4K Video 10 Gb/s Industrial AR Automotive 11ad. .11ax .11ac Distributed Wi-Fi Drone Control .11n 100 Mb/s Networking .11g .11a .11b Internet Video 1 Mb/s Audio Remote Control IoT Sensors 2000 2015 2030 © Qorvo, Inc. 35
Slide 36: Fragmented Technology Landscape
Fragmented Technology Landscape Early stages of IoT Short Range Local Area Wide Area Range < 10m/30ft < 100m/300ft Outdoor (Km/Miles) Content Distribution Focus on high data rates IEEE 802.11ax .11ah: HaLow 5G Sense & Control Low energy/long battery life Proprietary Solutions Sub-GHz Personal Applia
Slide 37: Open Standards Will Predominate
Open Standards Will Predominate Qorvo actively engaged in standard setting Short Range Local Area Wide Area Range < 10m/30ft < 100m/300ft Outdoor (Km/Miles) Content 5G Sense & Control © Qorvo, Inc. 37
Slide 38: Qorvo Connectivity Spanning the IoT
Qorvo Connectivity Spanning the IoT Four ways to connect Bluetooth Wi-Fi Zigbee/Thread LTE/NB-IoT Personal connectivity Smart home/office Ubiquitous sensors with Long-range connectivity integrated solutions requiring compact, maintenance-free for auto telematics and high bandwidth RF battery operati
Slide 39: Automotive Connectivity Opportunity
Automotive Connectivity Opportunity Smart cars getting smarter Telematics 3G, 4G, 5G CAGR 41% V2X C-V2X, DSRC CAGR 160% Infotainment Wi-Fi CAGR 35% SDARS Satellite Radio CAGR 8% 2017 2018 2019 2020 2021 2022 Source: Qorvo and Industry Estimates © Qorvo, Inc. 39
Slide 40: Legacy Connected Home
Legacy Connected Home Only a few connections © Qorvo, Inc. 40
Slide 41: Distributed Wi-Fi Emerges
Distributed Wi-Fi Emerges Connections increase, a lot! © Qorvo, Inc. 41
Slide 42: A Pod in Every Room
A Pod in Every Room™ The vision is complete, the smart home is a reality! © Qorvo, Inc. 42
Slide 43: Qorvo Products Span the IoT
Qorvo Products Span the IoT From front-ends to systems Standard Front-End Module Chip (SoC) Software System Short Range Pod in Every Pod in Every Room™ Room™ Firmware & Applications Local Area Wide Area © Qorvo, Inc. 43
Slide 44: Qorvo's Key IoT Differentiators
Qorvo’s Key IoT Differentiators Bringing value to the market SUPERIOR HIGHLY ROBUST ENERGY CAPACITY INTEGRATED COEXISTENCE EFFICIENT • Widest bandwidth, • Concurrent radio • Separating LTE/Wi-Fi/ • Maintenance-free highest linearity front- Zigbee/BLE battery operation end modules • Active devices in
Slide 45: Putting it All Together to Win in IDP
InfrastructurePutting it All Together & Defense to Win in IDP Products that Connect & Protect™ • Innovation • Product leadership • Speed • Scale • Solving our customers’ most difficult challenges © Qorvo, Inc. 45
Slide 46: Mobile Products
Mobile Products Eric Creviston, President © Qorvo, Inc. 46
Slide 47: Enabling the Next Wave
Enabling the Next Wave © Qorvo, Inc. 47
Slide 48: RF Value Increases With Each Generation
RF Value Increases With Each Generation RF TAM expected to exceed $20B in 2022 2G/3G/4G LTE Advanced/Pro 5G $20 B 5G will offer diversified market opportunities $15 B LTE Advanced/Pro, with CA, MIMO, drives $10 B current growth Legacy handset users $5 B are transitioning to LTE Advanced/Pro $0 B CY1
Slide 49: More Video, More Apps, More Hours, More Live
More Video, More Apps, More Hours, More Live …. 75% of all mobile data expected to be video in 2023 Mobile Data Traffic by Application Category per Month (Exabytes) 2017 2023 14 Exabytes 110 Exabytes per month per month Video Audio Web Browsing Social Networking Software Download Other Source: Erics
Slide 50: RF Complexity Is Multi-Dimensional
… Makes RF Complexity Multi-Dimensional Market Requirements Form Factor Device Performance MIMO 4x4 MIMO Ultra High Bands Output Power Output CA 256 QAM High/Mid CA Demand for more and Less space available for New and more stringent better RF required RF functions power standards © Qorvo, Inc. 50
Slide 51: RF Complexity Accelerates With 5G
RF Complexity Accelerates With 5G Adding $1B per year of TAM beginning in 2020 5G NR Antennaplexers $ TAM More bands More bandwidth + FDD/TDD CA Uplink CA Antenna Tuners Antennaplexers ET PMIC DRx Modules Antenna Tuners 4x4 MIMO DRx Modules 256 QAM + HPUE/PC2 Multiplexers PADs UHB PADs 2017 RF TAM 2
Slide 52: 5G Will Be Implemented In Distinct Phases
5G Will Be Implemented In 3 Distinct Phases 2018 2019 2020 2021 2022 5G New Radio (NR) Trials 5G NR Limited 5G NR Full Rollout Non-Standalone (NSA) specs Production All regions limited production Standalone (SA) specs Radio Specifications NSA: LTE anchor, 5G NR Dual Connect New 5G NR Modules, 5G re-
Slide 53: 5G Transforms the RF Front End
5G Transforms the RF Front End 4G must evolve to enable 5G n79 DRx n79n79 LB_1 LAA LB_2 LB 5GHz Wi-Fi LAA LM/MHB_1 Wi 2GHz Wi-Fi - Fi Fi Transceiver M/HB N79_1 5GHz Wi-Fi MHB_2 GNSS 2GHz Wi-Fi UHB_1 Transceiver GPS L5 UHB n77 LM/MHB_3 Rx Filter Bank N79_2 LB_2 UHB_2 UHB n77 DRx n79 n79 MHB_4 Rx Filt
Slide 54: Mobile Strategy
Mobile Strategy Delivering on the industry’s need for more and better RF Invest in core enabling technologies Drive disciplined portfolio management Partner with industry leaders © Qorvo, Inc. 54
Slide 55: Investing in Core Enabling Technologies
Investing in Core Enabling Technologies Delivering performance, solving complexity BAW & TC- Gallium Envelope Advanced SOI SAW Filters Arsenide Tracking Packaging CA Multi-band Signal routing High efficiency Extended Functional operation and tuning amplification battery life density © Qorvo, Inc. 55
Slide 56: Targeting highest growth, most complex placements
Targeting highest growth, most complex placements Leveraging core enabling technologies to transform our business High UHB Differentiation PAD BAW, Mid/High Band GaAs, SOI PAD Antenna BAW, GaAs, SOI, Integration Solutions BAW, Advanced LB Packaging, SOI PAD TC-SAW, GaAs, SOI, Integration DRx, FEMiD
Slide 57: Putting It All Together To Win in Mobile
Putting It All Together To Win in Mobile Investing to Lead Qorvo’s Key Strengths Combine to Drive Value Mid/High-band and UHB PADs Antenna Solutions Envelope Tracking Power Management Core Enabling Carrier & 3GPP Systems Customer Technologies Collaboration Architecture Support DRx Modules © Qorvo, I
Slide 58: Mobile Technology
Mobile Technology Todd Gillenwater, Mobile Products CTO © Qorvo, Inc. 58
Slide 59: Investing in Core Enabling Technologies
Investing in Core Enabling Technologies Delivering performance, solving complexity BAW & TC- Gallium Envelope Advanced SOI SAW Filters Arsenide Tracking Packaging CA Multi band Signal routing High efficiency Extended Functional operation and tuning amplification battery life density © Qorvo, Inc. 59
Slide 60: New Standards are Driving Higher Throughput
New Standards are Driving Higher Throughput Faster data rates require improved RF solutions Expansion into 600 MHz & Additional CA modes drive 5G standard utilizing 3.5 GHz, introduction of GPS L5 need for increased 4.5 GHz and re-farming impact antenna design multiplexing of bands lower frequency b
Slide 61: Filtering: Managing Crowded Frequency Spectrum
Filtering: Managing Crowded Frequency Spectrum 5G increases requirements for high-performance BAW filters New 5G bands introduce Frequency bands coexistence challenges GPS L5 GNSS Wi-Fi n77 n79 5 GHz Wi-Fi/LAA LB LMB MB HB1 HB2 n78 BAW TC-SAW/SAW 300 400 500 600 700 800 900 1000 1100 1200 1300 1400
Slide 62: BAW Filters Meet Stringent 5G Specifications
BAW Filters Meet Stringent 5G Specifications Qorvo BAW filters deliver better loss & rejection performance n79 Pass Band n79 Wide Band n79 Steep transition meets spec Lower loss n78 5GHz Wi-Fi Better n79 rejection Improved rejection Improved Better insertionBetter loss 4400 5000 4400 5000 Frequency
Slide 63: Antennaplexing, Multiplexing & 5G Drive Filter Growth
Antennaplexing, Multiplexing & 5G Drive Filter Growth n79 DRx n79n79 LB_1 LAA LB_2 LB 5GHz Wi-Fi LAA LM/MHB_1 Wi 2GHz Wi-Fi - Fi Fi Transceiver M/HB N79_1 5GHz Wi-Fi MHB_2 GNSS 2GHz Wi-Fi UHB_1 Transceiver GPS L5 UHB n77 LM/MHB_3 Rx Filter Bank N79_2 LB_2 UHB_2 UHB n77 DRx n79 n79 MHB_4 Rx Filter Ba
Slide 64: SOI: More Antenna Tuning
SOI: More Antenna Tuning To Maintain User Experience Reduced space with more antennas = Use cases cause frequency shift, smaller, more sensitive antennas impacting antenna efficiency 2017-18 2020-21 2 – 4 antennas 7 – 8 antennas © Qorvo, Inc. 64
Slide 65: SOI Technology Advancements for Antenna Tuning
SOI Technology Advancements for Antenna Tuning Qorvo’s Gen3 SOI delivers breakthrough results 120% >2x improvement in Figure of Merit (“FoM”) 100% 80% 60% 40% 20% 1 /3 the die size 0% 2015 Gen1 SOI 2017 Gen2 SOI 2019 Gen3 SOI Relative Tuner Size (%) FoM Improvement (%) © Qorvo, Inc. 65
Slide 66: 5G mmW in Mobile Devices?
5G mmW in Mobile Devices? Qorvo’s GaAs consumes less than half the power and half the area of SOI 16 Element Array 8 Element Array SOI GaAs 10000 700 9000 630 ) 2 W SOI 8000 560 m m m ( a n 7000 490 e o i r t 6000 420 A p y m a u 5000 350 r s r n A o 4000 280 a C n r GaAs 3000 210 n e e t w n o 2000
Slide 67: Power Management: ET Increasingly Critical
Power Management: ET Increasingly Critical Improves thermal performance and battery life 2017 2018 2019 2020 Qorvo ET for 5G reduces 2G/3G/4G/5G-NR DC, Dual ULCA 100 MHz RF (1CC 5G) battery current by 50% vs. APT 2G/3G/4G Dual ULCA 3x20 MHz RF (3CC) Qorvo ET for 2G/3G/4G ULCA 2x20 MHz RF (2CC) LTE r
Slide 68: Packaging: Integrated Modules, High Value Content
Packaging: Integrated Modules, High Value Content Consistent increase in RF content in single package 2010 2016 2018 >200 CA Combinations SOI LNA 100 CA Combinations Multiplexing SAW Filters BAW Filters SOI Switch SOI Switch SOI Switch PA PA PA © Qorvo, Inc. 68
Slide 69: Core Enabling Technologies to Solve RF Problems
Core Enabling Technologies to Solve RF Problems BAW and SAW Filters Bandwidth and insertion loss improvements for 5G multiplexing Leveraging core Gen3 SOI technologies to Tuners Significant improvement in FoM & linearity for tuners win Envelope Tracking Power management New high-efficiency ET tracke
Slide 70: Operations
Operations Steve Grant, Corp Vice President Fab Technology and Manufacturing © Qorvo, Inc. 70
Slide 71: Qorvo Operations Strategy
Qorvo Operations Strategy • Core enabling technologies • Capital efficiency • Production ramp excellence © Qorvo, Inc. 71
Slide 72: Core Enabling Technology Portfolio
Core Enabling Technology Portfolio Broad and deep offering Filters Power Amplifiers ET PMIC Tuners Switches Packaging BAW TC-SAW SAW GaN GaAs SiGe CMOS SOI SOI DS - BGA Differentiated technologies targeted at winning high-value segments © Qorvo, Inc. 72
Slide 73: Today's RF Uses All These Technologies
Today’s RF Uses All These Technologies Phase 6 LB PAD Phase 6 M/HB PAD 4 SAW filters 12 BAW filters / multiplexers 2 GaAs PAs 3 GaAs PAs 1 CMOS controller 1 CMOS controller 1 SOI antenna switch 1 SOI antenna switch 2 SOI switches 3 SOI switches © Qorvo, Inc. 73
Slide 74: BAW Technology Roadmap
BAW Technology Roadmap Technology advancements – performance, 5G market, cost Micro-BAW Dicing 2017 2018 2019 2020 2021 6” to 8” Wafer Size 3 to 6 GHz Stacked Resonators Technology Available © Qorvo, Inc. 74
Slide 75: BAW Filtering: Higher Power and Higher Frequency
BAW Filtering: Higher Power and Higher Frequency Qorvo’s SMR delivers better thermal management at higher transmit power Solidly Mounted Resonator (SMR) Film Bulk Acoustic Resonator (FBAR) • Vertical heat flux • Lateral heat flux • Thinner reflector layers T = 20 C* • Thinner membranes • Improved he
Slide 76: LAA/Wi-Fi Coexist Filter
LAA/Wi-Fi Coexist Filter 5.2 GHz BAW measured data Measurements Specs Mfg. Margins Temp. Margin Hot Temp. Margin Cold Measurements Specs Mfg. Margins Temp. Margin Hot (Qorvo measured data) Temp. Margin Cold • Alternative filters (LC) cannot achieve similar skirt steepness and loss • Ceramic filters
Slide 77: Power Amplifier Technology Roadmap
Power Amplifier Technology Roadmap Technology advancements – output power, efficiency, linearity and cost 50m GaN 4” to 6” 100 GHz Substrate GaN Wafer GaN 2017 2018 2019 2020 2021 HBT5 Gen2 HBT7 Cu GaAs mmWave Inductor pHEMT Next Gen Technology Available © Qorvo, Inc. 77
Slide 78: Assembly Technology Roadmap
Assembly Technology Roadmap Technology advancements – size, performance and cost 28 die 13 die Increased Density (LGA) Embedded Die 2017 2018 2019 2020 2021 Double-Sided BGA Molded Double-Sided BGA Topside View Backside View Technology Available © Qorvo, Inc. 78
Slide 79: BAW Capital Efficiency
BAW Capital Efficiency Technology-driven continuous improvement 1.0X 0.75X 0.50X 0.25X 2018 2019 2020 6” to 8” Micro-BAW Dicing Wafer Size Technology Conversion Available © Qorvo, Inc. 79
Slide 80: Operational Excellence
Operational Excellence Production ramp execution • World-class line and die yields • Copy-exact tool matching • Rigorous change control • Extensive and advanced monitoring systems Insitu Development 100% Known Good Real-time Tool Die-Level Hand-off Singulated Die Monitoring Traceability Automated Vi
Slide 81: Qorvo Leading in Quality
Qorvo Leading in Quality The results are in… Defects per Million Qorvo Wins Huawei Best Quality Team Award (Customer Data) 250 Qorvo scores #1 in five 0 2015 2016 2017 customer quality rankings • Line DPM rates at all-time lows for key mobile customers Qorvo Clean Launch Program Sets Gold Standard f
Slide 82: Qorvo Operations Summary
Qorvo Operations Summary A solid foundation of innovation • Industry-leading technology portfolio • Focus on highest value RF segments • Driving higher levels of integration • Leading the way to 5G, IoT and GaN Leading efficiency, quality • Capital efficiency • Production ramp excellence • Leading i
Slide 83: Mark Murphy, Chief Financial Officer
Mark Murphy Chief Financial Officer © Qorvo, Inc. 83
Slide 84: Profitable Growth
Profitable Growth Discipline, consistency and predictability Targeting Above-Market Growth Double digit • Broad-based IDP growth driven by GaN, IoT and 5G market growth • Mobile growth driven by content and complexity Create Expanding Margins On track to • Improving mix and higher utilization rates
Slide 85: Multiple Long-Term Growth Drivers
Multiple Long-Term Growth Drivers Optimizing product portfolio to leverage technology leadership SEGMENTS DRIVERS MARKETS GaN IDP IoT Diversified and Above-Market Growth Mobile Content Expansion Double digit Source: Industry reports and management estimates. market growth © Qorvo, Inc. 85
Slide 86: Expanding Margins
Expanding Margins Gross margin returns to 50% on improved mix and utilization 100% FY20 Targets 50%50% Factory Gross Margin Utilization 48% > 50% 80% 46% % Rev Mix BAW1 + IDP (BAW1 + IDP) 44% Revenue Mix 60% Gross Margin % Margin Gross FY20 > FY19 42% + Factory Network 40% 40% Q4 FY16 A Q4 FY17 A Q4
Slide 87: Expanding Margins
Expanding Margins OpEx growth < sales growth FY 16 A FY 19 F 15% of <13.5% of $500M Sales Sales • R&D $ growth for technology leadership and new opportunities R&D $250M • Spend focused on differentiated R&D for Highly Differentiated products and most attractive markets Products $0M • SG&A growth < ½
Slide 88: Increasing Free Cash Flow
Increasing Free Cash Flow Targeting $800 million FCF in FY19 $1.2B $0.8B Expanding Free Cash Flow $0.4B — Operating Cash Flow — Capital Expenditures $0.0B FY16 A FY17 A FY18 A FY19 F Non-GAAP: See the Supplemental Information on Non-GAAP Financial Measures included within this presentation. © Qorvo,
Slide 89: Capital Allocation
Capital Allocation New $1 Billion Share Repurchase Authorization FY18 FY 2018 Reinvest in the business $1.8B CashFY17 $926M in shares • Strong organic growth opportunities repurchased at Debt $993M an average of Debt / EBITDA 1.0x • $1.3B R&D spent FY16 to FY18 $55.54 Net Debt / EBITDA 0.1x Selectiv
Slide 90: Target Operating Model
Target Operating Model Creating value through above-market growth and expanding margins Metric IDP Mobile Qorvo Revenue Growth (1) Greater than Market Gross Margin > 60% > 48% > 50% Non-GAAP Target Operating Model (2) < 30% < 18% < 20% Expenses (% Sales) Operating > 30% > 30% 30% - 35% Margin (1) Do
Slide 91: Q&A
QOorVvao all around you Q&A
Slide 92: Thank You
QOorVvao all around you Thank You
Slide 93: Important Supplemental Information
Important Supplemental Information © Qorvo, Inc.
Slide 94: Supplemental information on Non-GAAP financial measures
Investor Day Presentation Supplemental information on Non-GAAP financial measures In addition to disclosing financial results calculated in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this presentation contains the following non-GAAP financial measures: (i)
Slide 95: Supplemental information on Non-GAAP financial measures (continued)
Investor Day Presentation Supplemental information on Non-GAAP financial measures (continued) Our rationale for using these non-GAAP financial measures, as well as their impact on the presentation of Qorvo's operations, are outlined below: Non-GAAP gross margin. Non-GAAP gross margin excludes stock-
Slide 96: Supplemental information on Non-GAAP financial measures (continued)
Investor Day Presentation Supplemental information on Non-GAAP financial measures (continued) Non-GAAP operating margin. Non-GAAP operating margin excludes stock-based compensation expense, amortization of intangible assets, restructuring charges, acquisition and integration related costs, loss (gai
Slide 97: Supplemental information on Non-GAAP financial measures (continued)
Investor Day Presentation Supplemental information on Non-GAAP financial measures (continued) Free cash flow. Qorvo defines free cash flow as net cash provided by operating activities during the period minus property and equipment expenditures made during the period. We use free cash flow as a suppl
Slide 98: Supplemental information on Non-GAAP financial measures (continued)
Investor Day Presentation Supplemental information on Non-GAAP financial measures (continued) Limitations of non-GAAP financial measures. The primary material limitations associated with the use of non-GAAP financial measures as an analytical tool compared to the most directly comparable GAAP financ