Ross Seymore : I just have one question, one follow-up. On the December quarter soft guide that you gave, Akash, you talked about your modem-only customer having its typical seasonality in the fourth quarter, calendar fourth quarter. What is typical seasonality and/or your expectations for the Android side of things in that quarter?
Akash Palkhiwala : Yes. So from an Android perspective, we expect the quarterly trend to be consistent with history. If you look at what typically happens for us in Android as we launch our new chips in the in the March quarter, and that’s when the new premium tier chip comes out, and that’s typically the stronger quarter for us. So it’s really driven by timing of product launches. But fundamentally, when you look at our position within Android, even within ’23, we’ve actually grown share of sell-through from ’22 to ’23. So we continue to be in a very strong position, and it’s just the market dynamics that’s kind of driving the cyclicality in the business.
Ross Seymore : And I guess as my follow-up, sticking with you, Akash, on the OpEx side of things, you talked about macro still being uncertain, and so you were going to take actions in the first half of year fiscal ’24 on the cost side of the equation. Could you give us any more color on that? I assume it’s largely on the OpEx side. You guys have been successful in hitting your 5% reduction, if not beating it exiting this year versus last. Any sort of quantification you can provide on what your expectations are for OpEx in that new cost-cutting plan?
Akash Palkhiwala : Sure. So let me give you the framework of how we’re thinking about it, and I don’t have quantification at this point. But we’ve — in ’23, we exceeded the target we set. And as we’ve said before, we’ll continue to look at additional reductions as the environment evolves. So given that what we’re planning to do is proactively implement additional actions in first half of ’24. And the framework for it is we’re going to preserve our strategic priorities. We’re going to reduce in certain areas, but then also have the capability to invest in new technology, especially AI and continue to invest in our diversification plan. So it’s really an effort to get our investment portfolio right as consistent with the priorities going forward for the company.
Operator: Our next question is from the line of Chris Caso with Wolfe Research.
Chris Caso : Yes. As a first question, if perhaps you could talk a bit about mix, where is your mix sitting as compared to where it was last year? And obviously, the mix has skewed higher during times of supply constraints and now there’s greater availability. So how is that affecting margins and revenue? And as things go forward, how do you expect that to change as well? I guess there’s some concern that mix shifts down to perhaps some lower end of the portfolio as the 5G cycle matures and emerging markets tend to become a bigger part of the 5G mix.
Akash Palkhiwala : Yes, Chris. It’s Akash. If you look at the mix change, it’s really happened through the year where we expanded our position in the lower tiers a bit, and it’s already reflected in the comments I made earlier to Stacy’s question on gross margin. So really no incremental comments to what I said earlier. As we look forward, one of the key opportunities for us is really how do we expand the ASP as just we’re continuing to see incremental demand across all tiers for more capability in the chipset. And to Cristiano’s earlier point with generative AI becoming so critical in edge devices going forward. it’s going to drive an inflection point in terms of our presence there and our ability to expand content.
Chris Caso : That’s helpful. Just a follow-up question about geographic revenue in particular to the handset business. And we’ve been hearing about perhaps greater macro concerns in China as compared to elsewhere. In terms of normalizing the business and getting the global handset market back to where it once was. Is this mainly a situation where we need to see China come back and normalize? Or is more of a global trend. What needs to improve in other words, to get back to what used to be normal?
A –Akash Palkhiwala : Yes, I’d say a couple of parts. So we’ve seen weakness across China and other emerging markets. Those are definitely the 2 areas. In developed markets, it is largely held. There is some smaller impact but not as much. I think the opportunity is really across the board. I think 1 is just from an overall replacement rate perspective, you could see that increase going forward, driven by new technology cycles, but also within the emerging markets in China, you could see some normalization of return and demand as things stabilize. So those would be the opportunities. Just to be clear, in the guidance that we’re giving at this point, we are not including those, and that would be upside to our plan.
Operator: Our next question is from the line of Brett Simpson with Arete Research.
Brett Simpson : Akash, I had a near-term question on smartphones. I mean some of your smartphone peers are reporting better fundamentals near term. I think MediaTek’s — in the June quarter, they were up 6% in smartphones, and they’re talking about mid-teens growth sequentially in September quarter. And I think Qorvo has also talked about quite a significant uplift in September. And I know you said there’s weakness elsewhere in QCT, but can you just maybe home in on the smartphone business? And can you reconcile with some of the peers and what they’re guiding and what you’re guiding? Is it just really Apple and Huawei is going through a volatile patch for orders? Or is there something more structural you think it work? And maybe a second question for Cristiano.
You talked earlier this year I think at Mobile World Congress actually that you were assuming no Apple business in 2024 because you didn’t have orders and new orders there. Has anything changed with regards to Apple? And how should we think about this relationship beyond calendar ’23?
Akash Palkhiwala : Yes, Brett. So I’ll start with your first question. If you — let me break it down into Android and Apple in 2 parts. Within Android, two comments to keep in mind. First is we don’t think there has been any significant shift in share between the players over the last few months. However, what has happened is when you look at our total share of sell-through for ’23 relative to ’22, as I mentioned earlier, we’ve actually gained share within Android. So we continue to have a very strong position and the kind of the seasonality across the quarters for Android is really a reflection of when devices are launched and which tiers we play in, which is the premium and high tier, which they center around the holiday season versus midway through the year.
So that’s how I would think about the Android market. On Apple, as I’ve said before, we expected muted seasonality in the fourth quarter due to the timing of chipset purchases. We did see them buy additional chipsets earlier in the year. And so what we are forecasting now is expected demand, expected shipments into the next quarter. So it’s — that really just speaks to timing again rather than some fundamental trend. As you know, we expect to be a majority of the share in the new upcoming launch, and so it’s not really a share question.
Cristiano Amon: Brett, to your second question, for the iPhone that is launching this year, we are going to support the modem. We’re not making any updates to our prior plans for 2024.
Operator: Our next question is from line of Tal Liani, Bank of America.
