スカイワークス 2026年度第4四半期決算説明会：Qorvo統合と5億ドル超のシナジー計画

主要なポイント

• スカイワークス・ソリューションズが発表した単体の2026年度第4四半期売上高は10億4,600万ドル、Non-GAAP希薄化後EPSは1.28ドルとなりました。売上高はガイダンス中央値の10億3,500万ドルを上回り、EPSも中央値を0.01ドル上回りました。
• ブロード・マーケット事業の売上高は約4億1,600万ドルに達し、前年同期比で9%増加しました。データセンター、Wi-Fi、車載向けの需要に牽引され、2026年度通期では前年度比約10%の成長となりました。
• スカイワークスは、当四半期終了後の10月5日にQorvo（コルボ）との統合を完了しました。9月期の合算売上高は約19億8,000万ドルとなり、これにはQorvoの報告週が1週多かったことによる約7,000万ドルが含まれています。
• 12月期について、経営陣は統合後の売上高を18億ドル〜19億ドル、Non-GAAP粗利益率を46%〜48%、売上高中央値におけるNon-GAAP希薄化後EPSを1.25ドルと予想しています。
• 同社は年間少なくとも5億ドルのコストシナジー創出目標を維持しています。その約3分の2は営業費用、3分の1は売上原価から得られる見込みです。
• 経営陣によると、データセンター、防衛、車載、ならびに大半のコネクテッド・エッジ関連事業で供給制約が発生している一方、Androidおよびコンシューマー向けIoTの需要は引き続き低調です。

主要財務データ

事業および業績の動向

9月期は、スカイワークスが単体企業として決算を発表する最後の四半期となりました。最終市場全体で需要は健全であり、経営陣はBBレシオ（受注出荷比率）も堅調であると説明しました。

ブロード・マーケット事業の売上高は約4億1,600万ドルとなりました。コンシューマー向けIoTの低迷が引き続き響いたものの、データセンター、Wi-Fi、車載向け製品が牽引して成長を果たしました。経営陣によると、Wi-Fi、データセンター、車載をはじめとするスカイワークス単体での主要な成長事業は、前年同期比で25%超の成長を記録しました。

プロフォルマ（見込算定）の統合ベースでは、2026年度のスマートフォン部門売上高は前年度比約11%減の約46億ドルとなりました。経営陣はこの減収について、Android向け売上の減少および最大顧客における搭載コンテンツの変動によるものとしています。統合後の新会社は、RFコンテンツの搭載価値が高いプレミアム端末にスマートフォンの投資を集中させる方針です。

2026年度におけるプロフォルマの分散成長市場（Diversified Growth Markets）部門の売上高は前年度比約12%増の約29億ドルとなりました。このカテゴリーの内訳は以下の通りです。

• フィジカルAIおよびコネクテッド・エッジ：16億ドル超
• 防衛および航空宇宙：約5億ドル
• データセンター・ネットワーキング・インフラ：約4億ドル
• 車載：約3億4,000万ドル

経営陣はデータセンターを同社で最も急成長している市場と位置付けています。同社の製品は、エンタープライズSSD向けの超高精度タイミング、電力絶縁、電源管理などをカバーしています。防衛需要は近代化、宇宙、電子戦、衛星プログラムにより下支えされており、車載向けコンテンツはコネクティビティ、電動化、セキュアアクセス、バッテリー管理用途の拡大が追い風となっています。

同社は経営陣の初期統合および人事システムの統合を完了しました。残るITシステムの統合は、2027年暦年上半期に完了する見込みです。

業績予想（ガイダンス）

12月期について、スカイワークスは統合後の売上高を18億ドル〜19億ドルと予想しています。中央値である18億5,000万ドル時点では、旧スカイワークス分が約10億7,000万ドル、旧Qorvo分が約7億8,000万ドルになると同社は見込んでいます。旧会社ごとの売上構成の内訳を開示するのは今四半期が最後となります。

経営陣は、2027年度中に約1億5,000万ドルの営業費用シナジーを見込んでおり、年度末時点の年換算ランレートで約2億5,000万ドル〜3億ドルに達すると予想しています。収益への寄与は同年度の下半期に偏る見通しです。

同社は統合取引の完了から24〜36ヶ月以内に、1桁台半ばから後半の売上高成長率、50%〜55%のNon-GAAP粗利益率、30%〜35%のNon-GAAP営業利益率、35%〜40%の調整後EBITDAマージンを目指しています。

リスクと今後の注視点

投入コストのインフレは引き続き粗利益率の押し下げ要因となっており、今後も継続すると予想されます。同社は価格改定、長期供給契約（LTA）、工場稼働率の改善、製造拠点の集約によって対応しています。経営陣は、年間契約によりコスト転嫁が難しいスマートフォン市場に比べ、分散市場ではより迅速な値上げの実施が可能であると説明しました。

供給制約がデータセンター、防衛、車載、その他の分散市場における成長のボトルネックとなっています。スカイワークスは追加のウェハ、基板、テスト能力の確保を進めており、供給確保のために保証金や前払い金を活用しています。

Android向けの需要は引き続き低調です。経営陣は、QorvoのAndroid向け売上高が前四半期比で20%超減少したと述べ、ローエンド製品からの撤退を進めることで、統合後のスマートフォン事業におけるAndroidの割合は10%未満になると予想しています。また、コンシューマー向けIoTも弱含みが続いています。

最大顧客が単体の四半期売上高の約62%を占めるなど、顧客の集中度は引き続き高い水準にあります。経営陣は、Qorvoとの統合によりRFポートフォリオが拡大したものの、スマートフォンのコンポーネント獲得競争は引き続き極めて激しいと強調しました。

アナリスト質疑応答の要点

• 長期的な成長構成：経営陣は、プレミアム端末とRF構造の複雑化が支援材料となる一方で、統合や価格圧力による相殺を受け、スマートフォン事業の長期的な成長率は1桁台前半にとどまると予想しています。一方、分散成長市場はこれを上回るペースで成長する見込みです。
• 粗利益率の拡大：50%〜55%の粗利益率達成に向けた道のりは、高利益率な分散型事業の比率向上、プレミアムスマートフォン製品、工場の集約、稼働率の改善、価格設定、およびコストシナジーに依拠しています。
• シナジー創出の時期：まず販売費及び一般管理費（SG&A）の削減が見込まれ、次いでR&Dの効率化が進む予定です。製造および売上原価に関する効果の大部分は、統合期間の後半に現れる見通しです。
• スマートフォン向けコンテンツ：経営陣は、統合されたポートフォリオにより、アンテナチューナー、電源管理製品、フィルター、その他のRFコンポーネントを通じて1台当たりの採用コンテンツ（搭載可能市場）が拡大すると述べました。1台当たりの採用ソケット数が増えることで、個別デザインウィンへの依存度を低減できる可能性もあります。
• 資本配分：同社は手元資金の蓄積、買収資金調達の管理、粗利益率向上や事業分散に寄与する規律ある買収（M&A）を行う柔軟性を維持しつつ、自社株買いを優先する姿勢を示しています。

決算発表電話会議トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good day, and thank you for standing by. Welcome to the Skyworks Q4 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Raji Gill, Vice President of Investor Relations. Please go ahead.

Rajvindra Gill

Thank you, operator. Good afternoon, everyone, and welcome to Skyworks' Fourth Fiscal Quarter 2026 Conference Call, our first as a combined company with Qorvo. With me today for our prepared remarks are Phil Brace, our Chief Executive Officer and President; and Philip Carter, Chief Financial Officer and Senior Vice President of Skyworks. This call is being broadcast over the web and can be accessed from the Investor Relations section of the company's website at skyworks.com.

In addition, the company's prepared remarks will be made available on our website promptly after the conclusion during the call. We have also posted a new corporate overview presentation to the Investor Relations section of our website which outlines the combined company strategy, markets, technology portfolio and investment highlights. Before we begin, I'd like to remind everyone that our discussion will include statements relating to future results and expectations that are or may be considered forward-looking statements. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today.

Additionally, today's discussion will include non-GAAP financial measures consistent with our past practice. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP. A note on presentation. Because the Qorvo transaction closed on October 5, after the end of our fiscal fourth quarter, our September quarter results are Skyworks standalone, and our December quarter outlook is on a combined basis.

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

Philip Brace

Thanks, Raj, and good afternoon, everyone. This is an important moment for our company. On October 5, we completed the combination of Skyworks and Qorvo, uniting more than 6 decades of innovation. We now have greater scale, a broader technology portfolio and an expanded manufacturing footprint, enabling us to continue to push the boundaries of what's possible. I want to thank our employees on both sides bringing 2 companies together, while continuing to deliver for customers, takes enormous effort and our teams have stayed focused throughout. That focus on execution carried through our final quarter as a stand-alone company. In the September quarter, Skyworks delivered revenue of $1.05 billion, above the midpoint of our guidance range, delivered non-GAAP diluted earnings per share of $1.28, $0.01 above the midpoint of our guidance; managed operating expenses to $237 million, near the low end of our guidance range, and repurchased $107 million of stock at an average price of $66.27.

In the quarter, demand was healthy across our end markets and book-to-bill was strong. Timing and power products continue to be a highlight with growing design engagement in AI data center. Automotive and industrial design activity was also robust. In smartphone, we executed well in our seasonally strongest quarter, driven by healthy demand at our largest customer, partially offset by well-known softness in the Android market. Broad markets, which will form part of our diversified growth markets category going forward, delivered revenue of approximately $416 million, exceeding our expectations. Revenue grew 9% year-over-year in the quarter and approximately 10% for fiscal 2026 driven by strong growth in data center, Wi-Fi and automotive despite continued softness in consumer IoT.

Consistent with prior quarters, strong demand came against a challenging cost background. Input costs remain a headwind to margins, and we expect that to continue. We are taking actions to mitigate these costs, including optimizing factory loading, securing long-term supply agreements and continuing to raise prices as appropriate. Looking ahead, we now have a full-stack RF front end platform for next-generation smartphones weighted heavily toward premium devices, where RF content is greatest and where we will continue to focus. Expanded reach across 4 secular growth markets, physical app, defense, infrastructure and automotive. Our broader technology portfolio having RF GaN, higher frequency capabilities, low voltage power and wired broadband. A path to a compelling target financial model, which to walk through. Going forward, we will report our businesses in 2 categories: smartphone and diversified growth markets.

Smartphone includes our formal mobile business and Qorvo's Advanced Cellular Group. Diversified growth markets include our former broad markets business and Corvel's high-performance analog and connectivity and sensor groups. It's a large and growing part of the company with above average gross margins and exposure to secular growth markets. On a pro forma combined basis, smartphone revenue was approximately $4.6 billion in fiscal '26 and down approximately 11% year-over-year, reflecting the anticipated decline in Android revenue and content dynamics at our largest customer. Broader content across each device should support steadier results as our reliance on any single socket declines and our content opportunity expands.

Looking further out, the smartphone is merging as a primary AI device, which we believe supports a continued shift towards premium phones. At the same time, RF complexity is rising again. 5G advanced and then 6G bring higher power, more transmit and receive pass, new spectrum and satellite connectivity all of which require more filtering, more applications and more sophisticated antenna solutions, more bands, more paths, more performance and more opportunities for Skyworks.

On a pro forma combined basis, diversified growth markets revenue was approximately $2.9 billion in fiscal 2026, up approximately 12% year-over-year at attractive gross margins. Let me give you a little more color on what's contained within our diversified growth markets. Physical AI and connected Edge, more than $1.6 billion in fiscal '26 covers connected devices at the edge. Wi-Fi access points and gateways, IoT devices and industrial automation and roles. As AI inference moves from the cloud into these edge devices, factories and robots, our wireless connectivity, power management and power isolation technologies give us more content opportunity per device.

Defense and Aerospace, approximately $500 million is driven by modernization, space and electronic warfare and expanding satellite constellations. We bring more the 35 years of development in Gallimarsenide gallium nitride filters advanced packaging, along with Category 1A trusted foundry accreditation. Our products are fielded across air, land, sea and space, supporting all branches of the U.S. Armed Forces and allied forces worldwide in radar, electronic warfare, sensors and secure communications. Defense customers are also increasingly engaging with us on power solutions to pair with our GaN amplifiers, further strengthening our position. Data center networking structure, approximately $400 million is our fastest-growing market, and we expect that to continue. In the AI data center, we provide high-precision timing, power isolation from the grid to the rack and power management for enterprise SSDs, where AI inference is creating new tiers of storage.

Automotive approximately $340 million continues to benefit as electrification, connectivity, autonomy and infotainment, raise content per vehicle from telematics and secure access to EV charging and battery management, we expect these trends to continue. Now an update on our integration. We are also a fast start the initial consolidation of our management team is complete. Our HR systems are integrated, and we expect the remaining IT integration to be done in the first half of calendar 2027. We remain fully committed to the $500 million or more of annual cost synergies with roughly 2/3 from operating expenses and 1/3 from cost of goods sold. Operating expense savings will come first with cost of goods savings building over time as we optimize our factory footprint, and we expect the earnings benefit to build through fiscal 2027 weighted to the second half.

What excites most is our expanded engineering capability. Our engineers are already working together, sharing ideas and combining technologies with the goal of creating products that neither company could build alone.

With that, I'll turn the call over to Philip to take you through our fourth quarter results and first quarter outlook as a combined company.

Philip Carter

Thanks, Bill, and good afternoon. Because the transaction closed after our quarter end, our September quarter results are Skyworks stand-alone. Skyworks revenue for its fiscal quarter end October 2 was $1.046 billion. Qorvo's revenue for its fiscal quarter ended October 3 was $937 million, which included an additional week, bringing combined September quarterly revenue to approximately $1.98 billion.

Beginning with our February earnings call, we will only report on a fully combined basis with smartphone and diversified growth markets as our revenue categories and therefore not providing legacy Skyworks or Qorvo details going forward. For the Skyworks stand-alone September quarterly results, revenue was $1.46 billion and above the midpoint of our guidance range of $1.035 billion. Mobile represented approximately 60% of revenue, supported by healthy sell-through at our largest customer in our seasonally strongest order, partially offset by well-known softness in the Android market as we remain focused on the premium tier. Broad markets represented approximately 40% of revenue and grew 9% year-over-year in the quarter and approximately 10% for fiscal '26, led by strong growth in data center WiFi and automotive.

Our largest customer accounted for approximately 62% of revenue, including non-smartphone products. Gross profit was $465 million or 44.4% of revenue, in line with our guidance. Input costs continue to remain a headwind. We are working toward offsetting them through cost controls and price increases and over time through manufacturing synergies as we consolidate our factory footprint. Operating expenses were $237 million, about $3 million below the midpoint of our guidance as we continue to fund key R&D programs while maintaining tight control over discretionary spending. Operating income was $227 million, translating to an operating margin of 21.7%. Other income and expense was roughly $12.5 million, and our effective tax rate was 10%, resulting in net income of $193 million and non-GAAP diluted earnings per share of $1.28, $0.01 above the midpoint of our guidance.

Turning to the balance sheet. We ended the quarter with approximately $2.6 billion in cash and investments and approximately $2.5 billion of debt, reflecting the roughly $2 billion of acquisition financing we completed ahead of the Qorvo closing.

Turning to our outlook for the December quarter, our first as a combined company, we expect revenue of $1.8 billion to $1.9 billion. At the midpoint, this includes approximately $1.07 billion from legacy Skyworks and approximately $780 million from legacy Qorvo. This will be the last quarter in which we provide the split. As Qorvo did not provide guidance during the pendency of the transaction, we want to be clear on the starting point, combined September quarterly revenue was approximately $1.98 billion, including an extra week at Qorvo worth approximately $70 million. Our outlook at the midpoint is down approximately 7% sequentially or approximately 3%, excluding the extra week. We expect smartphone revenue to decline in the low teens percent sequentially, reflecting seasonality, well-known softness in the Android market as we remain focused on the premium tier and the extra week in Qorvo September quarter.

We expect Diversified Growth Markets revenue to grow in the low single digits sequentially. Despite the extra week in the prior quarter and in the high to low double digits year-over-year on a combined basis, representing more than 40% of sales led by data center and defense. We expect non-GAAP gross margin of 46% to 48%, reflecting a favorable mix shift towards diversified growth markets, including higher-margin defense and infrastructure. This is partially offset by continued input cost increases, which we expect to persist. Over time, an increasing mix of diversified growth markets, manufacturing synergies, improved factory loading and pricing actions support our path towards our gross margin targets. We expect non-GAAP operating expenses of $465 million to $505 million, reflecting the combined company as we continue to invest in our key technology road maps, including our planned merit increases we expect operating expenses to decline sequentially from December quarter levels throughout fiscal 2027 as synergies are realized. We expect the majority of the earnings benefit in the second half of fiscal '27.

We expect to realize approximately $150 million of synergies in operating expenses within fiscal 2027 and to exit the year at an annualized run rate of approximately $250 million to $300 million. Below the line, we anticipate approximately $50 million in other expenses the midterm, primarily reflecting a full quarter of interest expense on the acquisition financing. We expect an effective tax rate of approximately 10% and a diluted share count of approximately 241 million shares. At the midpoint of our revenue outlook of $1.85 billion, this equates to expected non-GAAP diluted earnings per share of $1.25.

As synergies are realized, we remain confident in the earnings power of the combined company. Over the long term, we target mid- to high single-digit revenue growth and once fully integrated within 24 to 36 months of close, non-GAAP gross margin of 50%, 55%, non-GAAP operating margin of 30% to 35% and adjusted EBITDA margin of 35% to 40%.

With that, I'll turn it back to Phil for closing remarks.

Philip Brace

Thank you, Philip. Before we open the line, I want to thank our employees, customers and partners. This is our first quarter as 1 company and the energy across our teams is outstanding. Engineers from both sides are already working together, and I'm excited about what lies add. Together, we are stronger than either company on its own, broader technology, greater scale and a much larger opportunity ahead. I've never been more excited about where we're heading.

Operator, let's open the line for questions.

Operator

[Operator Instructions] Our first question will come from the line of Karl Ackerman of BNP Paribas.

質疑応答

Karl Ackerman

Your bond markets continues to progress well -- how are you thinking about the longer-term growth rate for broad markets as a combined entity now that you've closed Qorvo? And I guess the question is, can you sustain a similar rate or higher from the high single to low double-digit growth outlook that you laid out for December.

Philip Brace

Yes. Karl, thanks for the question. This is Phil. I'm glad you asked it. It's an important part of the portfolio. I'm glad you called it out. I mean if you look at the combined number back in fiscal '26, we talked about $2.9 billion. We talked about physical really at the $1.6 billion level, we've got Defense and Aerospace at 500 data center and infrastructure at and then auto at $340 million. For me, those are exciting growth areas, new technology -- and right now, frankly, all of those businesses are supply constrained and the demand far exceeds our ability to supply them. So we're working to handle it in most cases. We are seeing a little bit of softness in the consumer IoT space. I think we talked about that. But certainly, in the other markets, we are supply constrained at this point. And so we're going to look to try and get as much supply as we can.

Karl Ackerman

Got it, yes. I think if I may just follow up to that. I understand that broad market supply shortfall was part of a challenge in the past. It sounds like that narrowed a little bit in September. If you could just double click on that a bit, Phil, with respect to your ability to procure more wafers and substrates or test capacity and what you can do to further attack the demand opportunity in front of you for broad markets.

Philip Brace

Yes. I think you're right to call that out. And certainly in the September quarter, we did a good job on the -- we picked up -- we were able to secure some additional supply to our customers. And certainly, our data center business grew I think year-over-year from that perspective. So that continues to grow really well, both the timing and the power products -- that continues to be an area we continue to work towards, right? And I kind of mentioned we've -- it's a tight market out there, and we're working hard to do it. It's something we're spending -- our operations team are spending a lot of time line focused on for obvious reasons.

Operator

And our next question will be coming from the line of Craig Ellis of B. Riley Securities.

Craig Ellis

Bill, I'll start with you, and that's a longer-term question. Can you just frame up how you look at the longer-term growth model for mid- to high single-digit revenue growth -- and just talk about what you would expect the contribution to be from smartphone and then with diversified growth? Are we sustaining these attractive double-digit growth rates? Or could you even see them accelerate.

Philip Carter

Yes. Thanks, that's the question. If you look at the company as we break it out, and we kind of tried to be clear about that. We got the smartphone space, which is continue to be a major part of the business. We feel good about our expanded content position there got full access to the RF front-end stack now, and we really should be driving more stability there. I think that's 1 of the things we're trying to really get there is less variability per device. We're going to wait that -- those investments towards the premium segment, where our content matters the most -- we have more content opportunities there. We're trying to grab some stability there. So that's going to be -- the focus of that business is really kind of around stability.

We see content opportunities as we head into the 5G advance in the 6G marketplace as more bands, more filters, more capabilities come in place. But long term, we see that as kind of a low single-digit grower just based on the size of the scope of that. That's kind of what we're planning. So that really represents premium growth RF content opportunities offset by normal integration, price compression, right, things you get normal. So that's kind of how we see that. The diversified growth markets really have got 4 major pillars under there, right? We talked about the physical AI and connected edge right, which is kind of the biggest part of that business now, really exposed to things like Wi-Fi, which is a good growth segment for us. You're seeing expanded areas in industrial automation. Defense is a new part for us, that's really the picontren there from that side. And I think that it's a state of the world where that type of technology will continue to be a major part there.

Data center is our fastest-growing segment. From that point, we don't see any slowdown in that segment that's going to be supply constrained as well. And we seem to be in the sweet spot of automotive with respect to connectivity, infotainment, electric field charging and things like that. So we feel good about our portfolio of businesses, and we think that supports the growth outlook there. And frankly, we're going to be working hard to try and beat that. But I think I feel comfortable about that growth outlook now.

Craig Ellis

That's great. And then the follow-up is either for you or for Carter, Help us understand how you see the path to the 50% to 55% gross margin level, how much is the contribution from volume, how much from mix, how much from some of the cost savings that come into the model in the latter part of the synergies capture period?

Philip Brace

Yes, I'll start and then Bill Carter can jump in here a little bit. I mean, I think it's a combination of all those things. I think you're going to see us -- I think some of what you're going to see is as we continue to grow the diversified growth markets faster than the smartphone segment, you're going to see good mix, which should help lift that over time. You're also going to see some of the effects of the factory consolidations and some of the other things we're going to do over time. So I would say it's a mix of all those things. We have some on some headcount-related actions we'll take in that space as well. I will say, to point out, I mean, it is an inflationary environment, as I mentioned in a report. So we do have some headwinds we're fighting against there that we're going to continue to mitigate.

Philip Carter

But that's kind of what we see. I don't know, Carter, no, that's exactly right. I think the last thing I would mention just within the smartphone space, we are seeing a better mix shift towards the premium devices, right? As you kind of see a decline in the our intentional exit of the lower-end Android space. So yes, that captures it.

Operator

And our next question will be coming from the line of Chris Sanker of TD Cohen.

Unknown Analyst

I have like 2 questions, short term and the long term. My first question is more short term is congrats on closing the deal. It looks like your largest customer, they decided to out of content in calendar first quarter -- and since the deal just closed a month ago, but they're probably aware of this deal. I'm just wondering, does it change your content award process this time given you are a bigger much larger-scale supplier, how to think about it going forward? And then I have a longer-term question.

Philip Brace

Yes, this is Phil. I'll take that. No, I don't expect their award process to change. I do think we're obviously a larger provider for them now, but I'm not expecting our largest customer to change anything with respect to what they do. For us, it remains to be a highly competitive market. I expect that to remain to be so. And we're just going to have to continue to execute and deliver I would -- I guess I would say 1 thing with respect to that just because of the different portfolio of products that we have, the seasonality may be a little different than what we've seen in the past. Just because of where some of those products are loaded. So I think that historically, we'll try and do a better job of kind of talking about seasonality patterns going forward because I think there's some -- a little bit of variability from what we've seen in the past just based on that.

And then I think just to reiterate, the fact we've got more content per device now really should lead to less volatility because we've got, right, more stability going forward and less single socket volatility, which is really what we're trying to drive towards.

Unknown Analyst

Got it. Super helpful. And then a longer-term question. I think you spoke about the $150 million in synergies in fiscal 2017, $250 million to $300 million exit run rate. I'm just kind of curious how to think about the synergies how is it spread between clouds and OpEx? And how does the rationalization of the manufacturing footprint kind of come into factor for that.

Philip Brace

Yes. I think we mentioned about 2/3 of the total $500 million will be OpEx related, about 1/3 will be COGS related -- and when you think about the OpEx side, we commented in the prepared remarks, IT integration system or the HR system has already done. A lot of that is time to getting us IT milestones, which will happen in the first part of '27 as we combine and consolidate our ERP systems and things like that. So I would -- on the OpEx side, I would expect things like SG&A to come first R&D to come later and then COGS will start and work right away. But most of the COGS benefit will come near the tail end of the period as we talk about factory consolidation and things like that.

Operator

And our next question will come from the line of Joe Moore of Morgan Stanley.

Unknown Analyst

This is Al on the line for Joe. Now that you're 1 company and with the dividend eliminated last quarter, -- how are you thinking about capital allocation between buybacks, deleveraging and strategic M&A?

Philip Brace

Yes, I would say we're definitely maintaining our flexibility. We have a bias towards share buybacks -- but with the acquisition financing, we also want to build up a cash balance as we look forward. And we're going to be disciplined around accretive M&A that does grow gross margins and diversifies the base. But yes, we are maintaining some level of flexibility -- we are -- we were glad to see that we've got an investment-grade upgrade from Moody's to BAA3 and Fitch and moved us to stable. So good to see that. But yes, maintaining some level of flexibility as we move forward.

Unknown Analyst

Great. And then for my second question, just at a high level, if we look out 2 or 3 years, what does success look like for the combined company? And what milestones should we be watching along the way?

Philip Brace

Yes. Thanks. I think as we look out 2 to 3 years, I'd expect investors to say we've achieved delivering on those synergies at that run rate. I think I would expect to see our diversified growth markets continue to grow faster than 1 faster in our smartphone business, resulting in better diversification of our businesses from that side. And I think we should be on track towards hitting our business poor, 50%, 55% gross margin, 30%, 35% operating margin and 35% to 40% adjusted EBITDA margin. So a more diversified company, attractive growth segments great financial profile, synergies realized off to the races.

Operator

And our next question will come from the line of Jim Schneider of Goldman Sachs.

James Schneider

I was wondering if you maybe sort of speak to your customers' inventory levels, both your largest customer and then the broader Android market. And maybe kind of give us a sense about what your expectation is preliminarily around how a smartphone revenue in the March quarter might trend?

Philip Carter

Yes. Jim, this is Bill Carter. We generally only guide 1 quarter out of time. But as we look at the current quarter, we're kind of tracking to what we were expecting even at the end of last quarter in terms of our Apple revenue. We're seeing sequential growth with our largest customer at Skyworks stand-alone. So really no change in terms of what we're seeing in the marketplace for our largest customer in terms of units and volume. But yes, that's what I would say for that one.

James Schneider

Great. And then maybe just a little bit of color. I mean, clearly, the consumer electronics end market softer for all the reasons I think we know. Can you maybe talk about the consumer IoT part of the broader diversified business? And maybe how much of a headwind that represented in the quarter or in the guidance?

Philip Brace

I think we're going down to that level of detail. I think, Jim, you kind of -- if we look at that physical ad connect to edge kind of segment and we looked at that there, I mean the WiFi part continues to grow really well from that side. That continues to go well. That's offset by other sorts of stuff you've got in there pads and just other sort of consumer devices, consumer focused, Wi-Fi access points, things like that. So it's a lot of various stuff in there that I think goes on. But I think our WiFi continues to grow well and it's other softness stuff that yes.

Philip Carter

This is Rod. Just to add to that. So just on a stand-alone basis for Skyworks. So we ended the year in our broad markets business growing 10% year-over-year despite the softness in the consumer IoT. Our growth engines, whether it's WiFi, data center, automotive, are growing north of 25% year-over-year. So we're seeing a lot of growth in those markets. And as we look together as a combined entity, we're confident in the long-term growth rate in diversified growth markets driven by defense. Data center and automotive. So we're excited about the growth trajectory in that business.

Operator

Our next question will be coming from the line of Edward Snyder of Charter Equity Research.

Edward Snyder

Based on your report, it looks like for Steel and Skyworks, your largest customer has done about 12% per year if we subtract broad markets, it could be a little bit better than that, like 10% or so, which is interesting because units year-over-year because of the staggered release done substantially more than that. So it seems to suggest that maybe your content is a little bit better this year on the models that were released last year? I'm just trying to get clarity on that. And given the fact that you are seeing kind of a different release schedule, this would suggest -- I know you don't guide the March, but why shouldn't I expect that you should do better than seasonal for the March period, at least than your largest customer?

Philip Brace

Yes, Ed. I think -- I appreciate the question, and I'm sure you'll let me appreciate my subtlety of my answer, right? -- difficult. We can't really comment on individual SKUs. I think we stand by what we said before in terms of content and content mix. The guide reflects what we think about the current quarter. As you know, depending on how particular models ship and sell and when that things go, then that's how that's going to work. Our guide reflects what we believe is for the quarter, and we'll continue to kind of do that going forward. And we just can't really comment on how models are particularly going to go or individual SKUs and how that is. We just can't comment on that.

Edward Snyder

Okay. Okay. But in the last couple of quarters, you said that you expect it to be relatively flat on the fiscal year, correct? Do I have that correct?

Philip Brace

Yes.

Edward Snyder

Okay. And so given all that's going on in the space, you seem to be doing better than that at this stage. So I'm just saying, you're not bearing your guidance for the fiscal year yet. We're just going to have to see our results play out. Is that kind of what...

Philip Brace

Yes. And I think that's fair. Look, there's a lot of turbulence. I mean, you know there's just a lot of turbulence in the market on this topic. And I think we're just trying to guide 1 quarter at a time. We feel good about our position feel confident about our technology base. We've got great feedback, and we'll just continue to -- 1 foot front of the order and got 1 order in.

Operator

Our next question will be coming from the line of Srini Pajjuri of RBC Capital Markets.

Srinivas Pajjuri

And let me echo my congrats on closing the deal -- 1 question on the gross margin side. When it comes to your internal factories, now that it's a combined entity, can you give us some idea what the utilization levels are and where you see that going? And along the same lines, you talked about supply tightness and cost inflation -- any thoughts on kind of passing through some of those cost increases, especially in your faster-growing markets?

Philip Brace

Yes. So as you can imagine, as 2 separate companies, you can only optimize your footprint so much. But as a single combined company, we can do much, much more in terms of looking at the technology, getting into a smaller footprint and increasing utilization. So we're going through that process now, as Phil mentioned on the remarks, it takes longer to consolidate factory footprints and look at the technology and merge those together -- in terms of passing on costs, Phil talked about the cost headwinds. We're seeing that continue in the diversified space, we're able to pass that on more quickly and over time. In the kind of handset smartphone space, it's a little bit more challenging because those are kind of annual contracts and sometimes tier things.

And so it's a little bit tougher in that market to pass on those costs. And we are continuing to see those kind of cost headwinds come quarter after quarter. But yes, we have, as Phil mentioned, kind of entered into some deposits and prepay to some of our vendors to lock in cost and secure capacity to produce some of those shortages and headwinds there as well. So that's kind of the action we're taking today.

Srinivas Pajjuri

And then my follow-up on the Android. Obviously, it's weak, it's 1 known. Qorvo was exiting some of the lower end Android. I'm just curious where in that process we are? And maybe if you could kind of qualitatively talk about what percent of your sales roughly is Android now in terms of mobile? And then where do you see the Android business bottoming if Qorvo is still in the process of exiting that business, the low end of that business, sorry.

Philip Brace

Yes. Yes. That's a great question. Yes. So as we look at the Android business and specifically when we look at the Qorvo business, we've guided down Qorvo 17% without the extra week, it was down 10% and within that, the Android business is down over 20% sequentially, right? So we are seeing a reduction in the Android business. As we look into '27, with what we can see today, it does seem like we could be getting to a bottom in the Android space. And looking forward, it should represent less than 10% of our overall kind of smartphone business. So we do think that we have visibility, and that's kind of bottoming over the next -- this coming fiscal year, and that's -- it's going to become a smaller and smaller portion of our revenue.

Operator

Our next question will be coming from the line of May of Barclays.

Unknown Analyst

This is Kyle Busin on for Tom O'Malley. I just wanted to double click on some of the gross margin targets that were kind of laid out there. You guys are guiding for pretty significant expansion to that 50% to 55% range. And when I think about the overall market, there's a lot of cost increases and different pressure from memory. So I just wanted to see, in the short term, can you maybe comment on how you see gross margin in fiscal year '27 with some of those pressures that are out there in the market?

Philip Brace

Yes. So I'd say, as Phil mentioned previously, the earlier part of fiscal '27, we give 1 quarter at a time, but a high level of to the earlier part of because the costs come in early and the price increases come in later in the fiscal year, the earlier part, we'll have lower margins, but we'll start to see that expand as we move through fiscal '27. And Separate from that, the mix shift between, as we just mentioned, the lower end Android business and the rest of the smartphone business, that mix shift will continue throughout the year. In addition, the diversified business, which is above corporate average and gross margin, we'll continue to expand at the kind of low double-digit kind of rate over time. And so that combination will increase our margins. And then the synergy realization, as you kind of exit this year going into the 2028 and beyond, you'll start to see those actually improve our gross margin as well, and that's how we get to our kind of 50% to 55% gross margin targets.

Unknown Analyst

And then for my follow-up, I think you guys made a comment earlier on the call that content per device is coming up. I just wanted to check -- is that pro forma for the consolidated entity? So when you add Skyworks and Qorvo together, is content going up outside of just the base combination of what you have today and just kind of layering on that when you think about some of the comments you made on 5G advance do you -- when does that kind of layer in what could the size of that content increase be?

Philip Brace

Well, I think our overall SAM kind of increases because we've added new capabilities, right, in tenant tuners, PMIC products that we don't have today. So our SAM per device has gone up and therefore, our content naturally has gone up as well. Going forward, I would say, for the first time in years or as we start to see, we've got a tailwind of content coming with more transmit bands, more receipt bands, more satellite bands, more power devices -- so we see a tailwind of content, more filters that we haven't seen in the past. Now that's offset by integration, competitive dynamics and things like that. Like we need to execute to deliver that, but that's kind of how we see that going forward. And I think -- the other part is because we've got more sockets per device, the single-socket variability should go down a lot, which should provide some more stability for that business. I think it's just really important.

Operator

And our next question will be coming from the line of Vivek Arya of Bank of America.

Vivek Arya

This is Liam on for Vivek. So you talked about opportunities with the combined company, but I was wondering if you could elaborate more on the specific opportunities that you're most excited about in both iOS and Android and where you see the most upside relative to each.

Philip Brace

Well, 1 of the things I -- just a couple of weeks ago, we had the opportunity to bring some of our the best and retest engineers from both sides, these are areas that we weren't really able to talk about during the pendency period for obvious reasons, right? For the first time, bought the best engineers together. And I've got to tell you, I was just really excited about the energy in the room. I mean, I think that -- we've got some of the broadest, if not the broadest RF talent in the industry, period. And we now have the ability to have the entire RF signal chain. So I'm really looking forward to the opportunities that we could do to deliver fulsome solutions to our customers. And I think it's early days. That's something that we haven't really talked about in terms of, let's call it, product synergy, upside synergy, revenue synergies, right? Those are we've really underwritten this deal on, frankly, cost synergies.

And I'm really excited to see what the engineers are going to come up with from that side. And then we've got the same opportunity on the growth -- on the diversified growth markets. I imagine there are some other products we can expand into the defense and aerospace side, how can we expand that portfolio there. So I think there's a number of opportunities. It's early days. And honestly, I don't want to get ahead of our skis in talking about that because I want to let the engineers go through a cycle of innovation and get some feedback from customers. But I would say early days, I'm incredibly optimistic about what can come out of that.

Vivek Arya

Awesome. And then given your largest customer's recent long-term agreement with a competitor, is your addressable TAM there in the near to medium term, still the same now that our front-end stack? And are there any sockets that combined company could compete for that Skyworks couldn't separately or Coriant separately now that you guys are combined?

Philip Brace

I think we view that just sort of a little bit related to the kind of the dynamic that came before. I mean that business is always going to be a hypercompetitive business. There continues to be a competitive environment there. Obviously, with the competitive environment has changed a little bit of the number of suppliers in the space. However, it remains to be a competitive environment, and we still need to execute and deliver. And our customer -- largest customer is not going to just hand is business because all of a sudden we're combined, right? We need to continue to earn it and earn it every single day, and we've got thousands of people that are working hard to do that.

Operator

And our next question will be coming from the line of Christopher Rolland of Susquehanna.

Christopher Rolland

I guess my first question is, it's been a while since Qorvo has kind of been in limbo as you've been in regulatory. Just the asset that you thought you were buying -- and the puts and takes since it's actually sat in limbo which parts of the business maybe have gotten a little better and which maybe have gotten a little worse during that time just since we haven't got any Qorvo updates over that time.

Philip Brace

Yes, I'll take a high-level view of that, and I'm not going to characterize it necessarily better or worse, I'll just say kind of what we see. I mean, obviously, there's been some things. So I think in general, I as we look, it's been a little bit more than -- a little less than a month now, I guess, most excited about the Defense and Aerospace side. I think that's super excited, exciting. Most excited about the combination on the RF side for smartphones in terms of what we can do together there. I think that's really good and a lot of interesting opportunities there. And we know there are some things to do there because in another major customer, we have more of the RF signal chain. So we know there's some stuff the thing we can do. So I'm excited about that.

I think 1 of the other areas, right, if you look -- 1 of the other things that's happened is that since, I guess, we announced the deal, a little less -- a little over a year ago now, right? The Android market has changed pretty substantially, right? The memory shortage is the Android market. There's just been a lot of turbulence in that space. And that's been pretty well talked about for many years. So I would say that -- we've seen an increased deceleration in that part of the business, which ultimately isn't bad, actually. It's a richer mix of business. So I don't mind the switch. It's just -- as a matter of fact, I probably like it, it's just more about a change in dynamics, right? So that's what I would say.

Christopher Rolland

Excellent. And then just getting a little bit into the modeling net Gritty, just so that I understand it here. So if I understand it correctly, in the December quarter, there's little or no synergies. So that should be a clean base particularly for OpEx. And then I think you're saying exiting the year, we should be taking as an exit rate $250 million to $300 million of synergies this year. So I think that leaves very little, maybe $50 million for OpEx beyond this fiscal year. if I have that correct.

And then lastly, in terms of the 1/3 that's in COGS, should we just put that all in fiscal '28? Or how should we handle that as well?

Philip Carter

Yes. This is Carter. So starting with the OpEx synergies, to your point, yes, as you look at where we see that $150 million rolling through the year, it is definitely back-end loaded. And we do see a path where OpEx could decline sequentially throughout the year, inclusive of our merit increases during the year. So we are seeing that benefit improve as we go throughout the year. In terms of the COGS synergies, yes, I think putting them out beyond this year is there will be some COGS synergies this year. They might be masked by those cost increases, but we are taking action, being decisive and making sure we're closely monitoring all the costs within COGS as well. It's just they get masked by the increases that Phil talked about.

So -- but the OpEx one, you will see those grow over time. And yes, I think what you said was accurate.

Operator

And I would now like to turn the conference back to Phil Brace for closing remarks.

Philip Brace

Great. I'd like to thank everybody for joining on the call today, and we look forward to seeing you at upcoming conferences throughout the quarter. Thank you.

Operator

And this concludes today's program. Thank you for participating. You may now disconnect.