Press release·03/01/2025 06:58:56

THIRD QUARTER FISCAL 2025 OVERVIEW

Revenue for the third quarter of fiscal 2025 decreased 14.7% as compared to the third quarter of fiscal 2024, driven by a mix shift among smartphone customers to lower RF content 5G smartphones and a higher percentage of mass market Android smartphones, which contain less RF content. Revenue increased in defense and aerospace, as well as in infrastructure, driven by the timing of defense programs and infrastructure deployment cycles as compared to the prior year.

Gross margin increased to 42.7% for the third quarter of fiscal 2025 as compared to 36.1% for the third quarter of fiscal 2024. Charges related to a long-term capacity reservation agreement negatively impacted gross margin by 4.8% in the third quarter of fiscal 2024. In the third quarter of fiscal 2025, favorable business mix increased gross margin compared to the prior year.

Operating income was $53.0 million for the third quarter of fiscal 2025 as compared to operating loss of $41.6 million for the third quarter of fiscal 2024.

Net income per diluted share was $0.43 for the third quarter of fiscal 2025 as compared to net loss per share of $1.31 for the third quarter of fiscal 2024.

Net cash provided by operating activities was $214.1 million for the third quarter of fiscal 2025 as compared to $492.9 million for the third quarter of fiscal 2024.

Capital expenditures were $37.8 million for the third quarter of fiscal 2025 as compared to $26.4 million for the third quarter of fiscal 2024.

We repaid the remaining principal balance of $412.5 million on our 1.750% senior notes due 2024 (the “2024 Notes”) with cash on hand at maturity.

We recorded $68.1 million in restructuring-related charges, primarily in connection with initiatives to optimize our manufacturing footprint and reduce operating expenses, which included charges for workforce reductions, asset impairments and contract cancellations, resulting from restructuring our Android business and canceling certain multiyear projects to update our core business systems.

RESULTS OF OPERATIONS

Consolidated

The following tables present a summary of our results of operations (in thousands, except percentages):

| | Three Months Ended | | | | | | | | | |

	December 28, 2024		% of Revenue		December 30, 2023		% of Revenue		Increase (Decrease)
Revenue	$916,317		100.0%		$1,073,861		100.0%		$(157,544)
Cost of goods sold	524,901		57.3		685,983		63.9		(161,082)
Gross profit	391,416		42.7		387,878		36.1		3,538
Research and development	179,126		19.5		164,329		15.3		14,797
Selling, general and administrative	90,360		9.9		86,914		8.1		3,446
Other operating expense (1)	68,905		7.5		178,204		16.6		(109,299)
Operating income (loss)	$53,025		5.8%		$(41,569)		(3.9)%		$94,594

| | Nine Months Ended | | | | | | | | | |

	December 28, 2024		% of Revenue		December 30, 2023		% of Revenue		Increase (Decrease)
Revenue	$2,849,497		100.0%		$2,828,518		100.0%		$20,979
Cost of goods sold	1,680,471		59.0		1,721,880		60.9		(41,409)
Gross profit	1,169,026		41.0		1,106,638		39.1		62,388
Research and development	567,778		19.9		502,366		17.7		65,412
Selling, general and administrative	313,043		11.0		296,033		10.5		17,010
Other operating expense (1)	220,899		7.7		246,516		8.7		(25,617)
Operating income	$67,306		2.4%		$61,723		2.2%		$5,583

(1) Other operating expense includes goodwill impairment charges.

Three months ended December 28, 2024 compared to the three months ended December 30, 2023 The decrease in consolidated revenue resulted from a decrease in revenue of $211.0 million in ACG and increases in revenue of $52.8 million and $0.7 million in HPA and CSG, respectively, which are further discussed in our Operating Segments results below.

Charges related to a long-term capacity reservation agreement, which included a contract termination fee, negatively impacted gross margin by 4.8% in the three months ended December 30, 2023. In the three months ended December 28, 2024, favorable business mix increased gross margin compared to the prior year.

Research and development expenses increased driven by a $14.9 million increase in employee-related costs (including salaries and benefits, and stock-based compensation expense).

Selling, general and administrative expenses increased driven by a $6.3 million increase in employee-related costs (including salaries and benefits, and stock-based compensation expense), offset by a decrease in professional fees of $5.0 million.

In the three months ended December 28, 2024, “Other operating expense” includes restructuring-related charges of $61.1 million, primarily related to the cancellation of certain multiyear projects to upgrade our core business systems. In the three months ended December 30, 2023, “Other operating expense” includes a goodwill impairment charge of $173.4 million and restructuring-related charges of $6.3 million.

Nine months ended December 28, 2024 compared to the nine months ended December 30, 2023 The increase in consolidated revenue resulted from increases in revenue of $59.5 million and $41.0 million in CSG and HPA, respectively, offset by a decrease in revenue of $79.5 million in ACG, which are further discussed in our Operating Segments results below.

Charges related to a long-term capacity reservation agreement, which included a contract termination fee, negatively impacted gross margin by 1.8% in the nine months ended December 30, 2023. In the nine months ended December 28, 2024, improved factory utilization increased gross margin, while average selling-price erosion negatively impacted gross margin.

Research and development expense increased driven by a $44.3 million increase in employee-related costs (including salaries and benefits, stock-based compensation expense and incentive-based cash compensation) and a $25.1 million increase in product development costs related to developing new process technologies and new product categories.

Selling, general and administrative expense increased driven by a $13.8 million increase in employee-related costs (including salaries and benefits, stock-based compensation expense and incentive-based cash compensation).

In the nine months ended December 28, 2024, “Other operating expense” includes a goodwill impairment charge of $96.5 million, other restructuring-related charges of $99.7 million and $14.8 million of expenses associated with multiyear projects to upgrade our core business systems, prior to cancellation of certain projects in the three months ended December 28, 2024. In the nine months ended December 30, 2023, “Other operating expense” includes goodwill impairment charges of $221.4 million, $16.0 million of restructuring-related charges and $8.4 million of expenses associated with certain multiyear projects to upgrade our core business systems.

Operating Segments

High Performance Analog (HPA)

| | Three Months Ended | | | | | | | | | |

(In thousands, except percentages)	December 28, 2024		December 30, 2023		Dollar Change		Percentage Change
Revenue	$171,678		$118,890		$52,788		44.4%
Operating income	32,580		1,578		31,002		1,964.6
Operating income as a % of revenue	19.0%		1.3%

| | Nine Months Ended | | | | | | | | | |

(In thousands, except percentages)	December 28, 2024		December 30, 2023		Dollar Change		Percentage Change
Revenue	$449,397		$408,386		$41,011		10.0%
Operating income	50,527		50,988		(461)		(0.9)
Operating income as a % of revenue	11.2%		12.5%

Three months ended December 28, 2024 compared to the three months ended December 30, 2023 The $52.8 million increase in HPA revenue was attributable to a $40.4 million increase in revenue from infrastructure, and defense and aerospace. The revenue increase in infrastructure was driven by the timing of infrastructure deployment cycles, while the revenue increase in defense and aerospace was driven by the timing of defense programs and incremental revenue resulting from the acquisition of Anokiwave, Inc. (“Anokiwave”) in the fourth quarter of fiscal 2024.

The increase in HPA operating income was due to the impact of higher revenue and improved factory utilization, partially offset by an increase in operating expenses of $7.4 million, resulting from the acquisition of Anokiwave and higher salaries and benefits.

HPA results for the three months ended December 28, 2024 include $8.6 million in revenue and an operating loss of $5.1 million from the silicon carbide (“SiC”) power device business, which was subsequently sold in January 2025.

Nine months ended December 28, 2024 compared to the nine months ended December 30, 2023 The $41.0 million increase in HPA revenue was attributable to a $38.0 million increase in revenue from power management, infrastructure, and defense and aerospace. The revenue increase in power management, which includes our SiC-based products and products supporting solid-state drives and power tools, was driven by improved channel inventory levels compared to the prior year. The revenue increase in infrastructure was driven by the timing of infrastructure deployment cycles, while the revenue increase in defense and aerospace was impacted by the acquisition of Anokiwave.

The decrease in HPA operating income was due to an increase in operating expenses, offset by the impact of higher revenue and improved factory utilization. Operating expenses increased $27.9 million, resulting from the acquisition of Anokiwave and higher employee-related costs (including salaries and benefits, as well as incentive-based cash compensation).

HPA results for the nine months ended December 28, 2024 include $25.7 million in revenue and an operating loss of $14.6 million from the SiC power device business, which was subsequently sold in January 2025.

Connectivity and Sensors Group (CSG)

| | Three Months Ended | | | | | | | | | |

(In thousands, except percentages)	December 28, 2024		December 30, 2023		Dollar Change		Percentage Change
Revenue	$109,567		$108,898		$669		0.6%
Operating loss	(11,736)		(25,590)		13,854		54.1
Operating loss as a % of revenue	(10.7)%		(23.5)%

| | Nine Months Ended | | | | | | | | | |

(In thousands, except percentages)	December 28, 2024		December 30, 2023		Dollar Change		Percentage Change
Revenue	$371,242		$311,783		$59,459		19.1%
Operating loss	(40,211)		(73,476)		33,265		45.3
Operating loss as a % of revenue	(10.8)%		(23.6)%

Three months ended December 28, 2024 compared to the three months ended December 30, 2023 The $0.7 million increase in CSG revenue was attributable to a $9.0 million increase in revenue for our ultra-wideband solutions, automotive connectivity and sensing products, reflecting new product releases and improved channel inventory levels compared to the prior year. These increases were offset by an $8.3 million decrease in revenue for our Wi-Fi components due to timing of customer product releases.

The decrease in CSG operating loss was due to favorable product mix and improved factory utilization.

Nine months ended December 28, 2024 compared to the nine months ended December 30, 2023 The $59.5 million increase in CSG revenue was attributable to a $66.6 million increase in revenue for our Wi-Fi components, ultra-wideband solutions, automotive connectivity and sensing products, reflecting new product releases and improved channel inventory levels compared to the prior year. These revenue increases were partially offset by a $7.1 million decrease in revenue from our biotechnology business, which was sold in fiscal 2024.

The decrease in CSG operating loss was due to the impact of higher revenue, favorable product mix and improved factory utilization, partially offset by an increase in operating expenses of $5.4 million. The increase in operating expenses was driven by research and development expenses, including salaries and benefits, as well as incentive-based cash compensation, related to developing new process technologies and new product categories. In addition, our biotechnology business, which was sold in fiscal 2024, generated an operating loss of $8.8 million for the nine months ended December 30, 2023.

Advanced Cellular Group (ACG)

| | Three Months Ended | | | | | | | | | |

(In thousands, except percentages)	December 28, 2024		December 30, 2023		Dollar Change		Percentage Change
Revenue	$635,072		$846,073		$(211,001)		(24.9)%
Operating income	161,228		263,792		(102,564)		(38.9)
Operating income as a % of revenue	25.4%		31.2%

| | Nine Months Ended | | | | | | | | | |

(In thousands, except percentages)	December 28, 2024		December 30, 2023		Dollar Change		Percentage Change
Revenue	$2,028,858		$2,108,349		$(79,491)		(3.8)%
Operating income	492,734		593,595