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Executives

Doug DeLieto – Investor Relations

Bob Bruggeworth – President and CEO

Dean Priddy – Chief Financial Officer

Eric Creviston – President, Cellular Products Group

Bob Van Buskirk – President, Multi-Market Products Group

Analysts

[Athi Kedron] – Oppenheimer

Parag Agarwal – UBS

Harsh Kumar – Morgan Keegan

Anthony Stoff – Craig Hallum

Bank Masini with JP Morgan

Scott Searle – Merriman Curhan Ford

Todd Kaufmann – Raymond James

BJ [Ricash] – Stern Aggie Leach

Nathan Johnson – Pacific Crest

Quinn Bolton – Needham & Co.

Tore Svanberg –Stifel Nicolaus

Tim Luke – Barclays Capital Incorporated

Michael Burton – FBN Securities

Aalok Shah – D. A. Davidson

Amy Northorth – Pilot Advisors

Cody Acree – Williams Financial Group

RF Micro Devices Inc. (RFMD) F1Q11 (Qtr End 6/30/10) Earnings Call July 27, 2010 5:00 PM ET

Operator

Ladies and gentlemen, thank you for standing by and welcome to the RF Micro Devices First Quarter Fiscal 2011 results conference call. (Operator Instructions). I will now turn the conference over to Doug DeLieto, Vice President Investor Relations of RFMD. Please go ahead, Sir.

Doug DeLieto

Thanks very much, Brittany. Hello everybody, and welcome to our conference call. At 4:00 p.m. today, we issued a press release. If anyone listening did not receive a copy, please call Samantha Alfonso at the Financial Relations Board at 212-827-3746. Sam will fax a copy to you and verify that you’re on our email list. In the meantime, the release is also available on our website rfmd.com under the heading, Investors.

At this time, I want to remind our audience that this call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management’s current expectations. We encourage you to review the Safe Harbor Statement contained in the earnings release published today, as well as our most recent SEC filings for a complete description.

In today’s release and on today’s call, we provide GAAP and non-GAAP financial measures. We provide the supplemental information to enable investors to perform additional comparisons of operating results, and to analyze financial performance without the impact of certain non-cash expenses for unusual items that may obscure trends and our underlying performance.

During the call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For a complete reconciliation of GAAP, non-GAAP financial measures, please refer to our earnings release issued earlier today available on our corporate website rfmd.com under Investors.

Similarly, for an explanation of how RFMD calculates return on invested capital, free cash flow, and positive net cash position, please refer to today’s earnings release.

In fairness to all listeners, we ask that participants please limit themselves to one question and a followup. After each person in the queue has received a turn, we’ll give participants an opportunity to ask a second question.

With me today are the line are Bob Bruggeworth, President and CEO; Dean Priddy, Chief Financial Officer; and Eric Creviston, President of our Cellular Products Group; and Bob Van Buskirk, President of our Multi-Market Products Group, as well as other members of RFMD’s management team. And with that, I’ll turn the call over to Bob Bruggeworth.

Bob Bruggeworth

Thanks Doug, and welcome everyone.

I’m pleased to report June quarterly results that demonstrate another quarter of outstanding execution by the entire RFMD team.

RFMD delivered our fifth consecutive quarter of sequential revenue growth. And fourth consecutive quarter of record operating income, while also achieving measurable success on our strategic initiatives related to product leadership and customer diversification.

On a year-over-year basis, total revenue grew 29%. RFMD’s financial performance is all the more impressive considering year-over-year revenue trends at our largest customers.

Sales to our largest customer declined year-over-year, and represented approximately 44% of total revenue in the June quarter compared to 59% one year ago.

Meanwhile, sales to all other customers in the June quarter grew by more than 75% year over year, adding approximately $270 million in new incremental revenue on an annualized basis.

RFMD is achieving our diversification goals as our financial performance has continued to improve.

Through the fiscal year, we expect continued success diversifying our revenue as a result of new and expanded customer engagements supported by the secular growth drivers in our end markets.

RFMD’s markets are expanding quickly with the growth of broadband data across both fixed and mobile networks. This is accelerating demand for always-on mobile data, and for the exciting new devices and applications that connect us to our data and to each other.

RFMD is benefitting as broadband infrastructure is deployed, as demand accelerates for new mobile broadband devices, and as these devices increasingly offer more modes of connectivity.

Finally, RFMD is benefitting from the increasing focus on energy conservation both in the power efficiency of our products, and the power consumption of networks at large. This is placing a greater premium on RFMD’s product leadership and technology innovation.

Our customers are benefitting from RFMD’s ability to integrate greater functional density and RF components that are smaller, more cost effective, and more power efficient with each generation.

RFMD’s products enable reduced size, improved battery life, and proof power efficiency, lower costs, and ultimately, an enhanced user experience.

We are making considerable progress delivering a revolutionary new PowerSmart Power Platforms to a growing list of customers.

Five of the world’s leading Smartphone manufacturers are conducting phone builds with PowerSmart, each of whom will support a significant expansion and dollar content per phone for RFMD.

Since our last conference call, we’ve seen a significant increase in customer, in channel partner adoption of PowerSmart.

Our product leadership is creating multiple opportunities for growth and diversification across the world’s largest baseband providers. We have incremental opportunities with MediaTek, Qualcomm, ST-Ericsson, Infineon, Broadcom, Marvell, and others. These opportunities span 2G and 3G entry level handsets, up through 3G-connected devices, and 3G, 4G smartphones, including TDS, CDMA, and TDLTE.

In cellular, it’s our strategy to own the entire front end. RFMD has shipped our power management devices for more than five years. And we’re expanding our available markets to include Antenna Switch Modules, Switch Filter Modules, and Switch Duplexer Modules.

In the June quarter, the product family generated approximately $15 million in annualized revenue. Before the end of this fiscal year, we expect the revenue run rate for these products to more than double. And we’re forecasting strong incremental revenue gains from RF Power Management and switch-based products in Fiscal 2012.

In SmartEnergy, we are parting with Ember, Freescale, and others to capture key opportunities in Smart Grid Networking across cellular and ISM bands.

We are winning new programs in supportive leading SmartEnergy customers. Our SmartEnergy revenue has grown approximately 70% year over year. And we continue to expect SmartEnergy revenue to nearly double in Fiscal 2011.

We are also opening up new opportunities for our breakthrough Gallium Nitrite technology, which changes the performance landscape for power products. A number of global markets are pulling this high bandwidth power technology, including cable infrastructure, military communications, public mobilized radio, and both military and civil radar applications.

We have also seen our cellular wireless infrastructure and point-to-point back hall revenues increase by more than 50% over last year. As wireless data services continue to grow dramatically, our 3G and 4G product leadership and robust worldwide support capabilities are driving our business growth with global wireless equipment OEMs.

Before handing the call over to Dean, we recognize there are concerns among the investors about CPG’s revenue as legacy programs ramp down. And I’d like to walk our audience through some of the larger opportunities we see contributing to significant revenue growth in Fiscal 2012.

First, research in motion. We are working closely with RIM to expand our share across multiple tiers of Smartphones. And we are very pleased to support RIM with multiple products, including power amplifiers, power platforms, and high-performance multi-load switches.

Second, Motorola. We spent years rebuilding our product pipeline with Motorola in very close coordination with their product teams. And we’re pleased to be approaching a number of meaningful new product launches.

Third, Nokia. We are extremely pleased with our recent design wins at Nokia which expand their entire product portfolio, and include high profile follow-on programs expected to drive significant volumes. These are large platform wins, which we believe represent an inflection point in our design-win activity at Nokia.

Next, MediaTek. We’ve had the lead on MediaTek’s upcoming GSM SoC, as well as on their highly anticipated 3G platforms. We are particularly excited to support the ramp of the handsets on MediaTek’s first 3G platform expected later this year. We believe entry-level 3G Smartphones will represent the next big growth engine in developing nations. And RFMD in tandem with MediaTek is at the forefront.

Finally, Qualcomm. We continue to expand our opportunities with Qualcomm. And we have secured multiple new front-end wins across leading customers; Samsung, Walway, LG, and others.

We’re also forecasting solid growth in shipments of our cellular switches supporting an increasing number of 3G band combinations.

Taken in aggregate, we’re forecasting these opportunities to support well over $250 million in additional incremental revenue, supporting highly diversified growth in Fiscal 2012. To be clear, this revenue is on top of the strong base of revenue we’ve already built.

In closing, over the past two years, RFMD has shared with investors our efforts to expand and diversify our customer base. Today, we’re executing on diversified growth opportunities at RIM, Samsung, Motorola, Nokia, Sony Ericsson, LG, on Qualcomm reference designs, on MediaTek reference designs, and across hundreds of other customers, and multiple platform partners.

Adding to this, we’re forecasting our multi-market business will continue to contribute meaningful to our top and bottom line results fueled by thousands of products and thousands of customers.

We are driving our organization for revenue growth in Fiscal 2011 supporting record operating income and double-digit growth in earnings per share. And we’re forecasting our revenue growth will accelerate in Fiscal 2012 as major new programs at new and existing customers ramp into volume production.

And with that, I’ll turn the call over to Dean.

Dean Priddy

Thanks, Rob. And good afternoon, everyone.

First, a quick reminder, the income statement results and comparisons will be non-GAAP.

Before I cover the details of our June Fiscal Q1 FI11 Financial Results, I’d like to comment on some trend data that we believe will assist investors in evaluating our operating results.

I’ll begin with revenue diversification. Since the June quarter of last year, revenue outside our largest customer has grown 77%, or $270 million of new incremental revenue on an annualized basis. Our largest customer now represents 43½% of revenue compared to approximately 59% the same quarter a year ago. And will likely be below 40% in the upcoming September quarter.

We have been successful diversifying our revenue base across a broad range of customers. And our strong financial performance reflects this diversification.

Gross margin, operating margin, and operating income have all improved, with operating income at record levels.

Our ability to generate cash has been enhanced significantly, with $189 million in trailing 12-month free cash flow, today we’re on a run rate to exceed the $177 million we generated in Fiscal Year ’10.

RFMD’s net debt with our recent bond repurchase is now under $50 million. And we expect to achieve a positive net cash position as early as this, the September quarter.

Since the spring of 2008, RFMD has repurchased 30 million shares of common stock, retired approximately $372 million of convertible debt, and reduced net debt from approximately $375 million to under $50 million.

RFMD’s strong income statement performance coupled with reduced capital investment driven by the timely acquisition of our six inch [inaudible] Gan in the UK is driving our return on invested capital well beyond our weighted average cost of capital.

RFMD’s return on invested capital, commonly referred to as ROIC, has improved over the last five quarters, and now stands at 41.2%.

Now moving to the June Financial Results. Revenue for the June quarter was $273.8 million, up 28.8% year over-year, and at 5% sequentially. We saw 18.3% sequential growth in sales outside our largest customer. Sales into Asia were particularly strong as we continue to build on our relationships with Samsung, HTC, Walway, ZTE, and with MediaTek’s hundreds of customers.

Also, MPG sales in six broadband, or cable TV, point-to-point, and wireless infrastructure, SmartEnergy, and catalog products all grew substantially, both on a sequential and year-over-year basis.

Gross profit was $107.4 million, and operating expenses were $55.7 million, with G&A, of $9.3 million, sales and marketing, $12.1 million, and research and development, a $34.4 million.

Operating expenses were flat sequentially. Operating income was a record $51.7 million representing an 18.9% operating margin.

Non-cash share-based compensation expense, which is excluded from non-GAAP results total approximately $5 million, of which approximately $1 million was in cost of goods sold.

RFMD’s core business, which excludes the affect of transceivers, achieved gross margin and operating margin of approximately 42% and 18% respectively. Our core business has grown profitably and continues to support our intermediate and longer term expectations for a growth in earnings per share.

Other expense was 127,000 in cash taxes for $7.2 million, an increase of $4 ½ million from the March quarter.

Non-GAAP net income for the June quarter was $44.3 million, or $0.16 per diluted share based on 278 million shares using the HIFF converted method.

Something to note for sequential comparison, if cash taxes in the June quarter had been flat with the March quarter, reported earnings per share would have been a full $0.02 higher, or $0.18 per share.

Now going to the balance sheet. Free cash flow was $46 million with an EBITDA of $62.2 million. Total cash, cash equivalents, short-term investments, and trading security investments was $281.4 million reflecting $10 million of convertible bond repurchases made during the June quarter.

RFMD’s inventory was $128 million, with turns improving to 5.4.

Net PP&E was $237 million, compared to $247 million last quarter.

Capital expenditures during the quarter was $6.6 million with depreciation of $16 ½ million, and intangible amortization of $4 ½ million.

RFMD has benefiting today from the 2008 acquisition of our fully depreciated state-of-the-art six-inch [inaudible] in the United Kingdom. This acquisition gave RFMD industry leading capacity while significantly lowering our projections for capital investment for years to come.

Now, for the business outlook and financial targets. RFMD believes the demand environment in our in-markets remains strong. And we currently expect September quarterly revenue will be in line with June quarterly revenue. We expect to continue ramping new customer programs to offset the declining end-of-life legacy products. We currently expect Fiscal 2011 cash taxes will increase to $26 to $28 million compared to $14.1 million in Fiscal Year ’10, reflecting RFMD’s improved profitability.

We currently expect Fiscal 2011 free cash flow will be consistent with Fiscal 2010 free cash flow of $177 million. We currently expect to achieve a positive net cash position as early as the September quarter.

And finally, in Fiscal 2012, we currently expect revenue growth to accelerate as major programs that new and exciting customers ramp into volume production.

And with that, we will open the call to your questions.

Question-and-Answer Session

Operator

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions)

Our first question comes from the line of [Athi Kedron] with Oppenheimer. Please go ahead.

[Athi Kedron] – Oppenheimer

Thank you. And congrats, guys, on good results. Dean, could you give me a little bit more color on the September top-line guidance? I mean, you had said declining legacy. I would assume that’s Polaris. Can you give us a sense of magnitude, or on the flip side, what your revenue would have grown if Polaris was flat, or neutralized out of the [inaudible].

Dean Priddy

Athi, I’ll start the answer and then I’m going to turn over to Eric Creviston. He can give much more color on Polaris.

You’re exactly right. It does – the Legacy products are primarily the Polaris products, which we’ve been forecasting, will begin to decline in the September quarter.

So you know, in terms of the revenue guidance, you know, we’re actually booked for a flat to maybe slightly up at this point in the quarter. So you know, if you compare our sales to where, you know, we normally are, we feel like we’ve got a very, very good visibility going into the September quarter.

So with that said, I’ll let Eric comment on the Polaris.

Eric Creviston

Sure. Hi, Athi. This is Eric. The outlook for Polaris is largely consistent with what we said the past couple quarters. The June quarter was a bit strong, and ended nearer to the 15% of corporate revenues, you know in the range of 10% to 15%, but closer to 15%. We will begin to see that ramp down this quarter. It will be closer to the 10% of revenues in the September quarter.

In the December quarter, it should be well below 10% of corporate revenues, and below 5% in March.

[Athi Kedron] with Oppenheimer

Okay. So is it fair to assume that we should expect kind of mute growth as well going into December, just because of this correction?

Erick Creviston

Well, I think, number one, it depends on how quickly the actual fall off of Polaris happens. But we’ve got some fairly significant opportunities ramping in that time period as well.

So you know, you’ve got the overall macro environment and the total units of handsets, and also the MPG organization, but I think both MPG and CPG have some substantial growth drivers going into the December quarter.

It’s still too early to call December. We’ll take it one quarter at a time.

[Athi Kedron] with Oppenheimer

Okay. And lastly, on your comments, Bob, on $250 million of incremental revenue, is that in Fiscal ’12 versus ’11, and should we assume, or is it your underlying assumption that everything you have right now also stays? Meaning, there’s no erosion of your existing revenue?

Bob Bruggeworth

Yeah, the number I used was actually $270 million. Sorry if that didn’t come through clear. And again, that’s our growth, if you will, on an annualized basis, looking year over year, outside of our largest customer, and you know who that is. So that’s moving forward. And I said, that’s layering that on top of the base.

As Eric’s already alluded to, our legacy products, and that being Polaris’ rolling off. I think it’s quite well know what’s going on with our largest customer. So what we’re trying to make sure investors understand is, we have already locked in the design wins and are demonstrating the growth to grow this fiscal year 2011 as well as grow in Fiscal 2012.

[Athi Kedron] with Oppenheimer

Very good. Good luck guys.

Bob Bruggeworth

Thank you.

Operator

Thank you. Our next question comes from the line of Parag Agarwal with UBS Securities. Please go ahead.

Parag Agarwal - USB

Hey guys. Thanks for taking my question. If we look at July revenue, like you said, it grew 18% quarter over quarter including your largest customer. So just one thing within that 18% growth, was there any particular customer that was especially strong or any other region that was basically strong? Any color on that would be very helpful.

Bob Bruggeworth

Yeah, actually the growth was pretty diversified, very similar to the prior quarter where we grew about 17%. MPG contributed both quarters very meaningfully across a number of different customers.

We did talk about the cable TV coming back, but again, that’s a small percentage when you look at the total company. And across CPG, you know, it was across 2G, 3G, in Korea, in China. We saw growth in some of the European customers, again, outside of our largest customer. It was really balanced growth.

Parag Agarwal – UBS

Okay. Next question is about your cash flow guidance, roughly flat with 2010. I understand CapEx and the taxes. Other than that, are any other moving parts related to margins or anything else?

Dean Priddy

Well, yeah, if you think about it just to stay constant with the [inaudible], our cash taxes are going to be up $12 to 14 million year over year, and CapEx, you know, we’re projecting 2% to 3% of sales this year, whereas capital expenditures were a little under $10 million last year.

In other words, the underlying business is expected to actually generate better cash flow in Fiscal Year ’11 than it did in Fiscal Year ’10.

Parag Agarwal – UBS

Thank you.

Operator

Thank you. Our next question comes from the line of Harsh Kumar with Morgan Keegan. Please go ahead.

Harsh Kumar – Morgan Keegan

Good results. If I can go back to part of the first question about your largest customer. Can I ask you if you are aware if you lost any major slots there, or have yet? Or is it just mostly what is happened to the largest customer in its own market share?

Bob Bruggeworth

I’ll take a shot and let Eric be a little more detailed. Clearly our largest customer, their share gains, losses, whatever you want to look at, had some impact on us. But when I commented about some of the – it was the third thing I mentioned about our growth opportunities there. We actually locked in several major design wins across, you know, 2G, 3G entry, you know, smartphones, what have you.

So as the quarter goes, I think for further revenue streams, we had tremendous strength in design wins at our largest customer. So as far as what’s going on now, you know, we talked a little bit about the roll off in Polaris, along with, you know, we’ve been commenting for many quarters now how we’re managing our share down at our largest customer. And more than offsetting that with the growth that we’re seeing outside of our largest customer.

Harsh Kumar – Morgan Keegan

Thanks for that clarity. Gross margin, I see it slipping a little bit. Was that just Polaris ramping up significantly affecting the mix?

Dean Priddy

Yeah. That impacted things. It was more of an inter-quarter mix type issue, Harsh. And you know, we could say the complete opposite to go in our favor this coming quarter. So you know, 4/10ths of a point is kind of what we consider more or less in the norm.

Harsh Kumar – Morgan Keegan

And I got you, Dean. And then if I can get some color on some of your other big kind of target customers. Maybe you could talk about Samsung, if you’re able to substantially grow your share in the June quarter there? Or any kind of numbers, and even, Dean, if you can talk about that, that would be very helpful. And then I’ll get back in the queue.

Eric Creviston

Okay, thanks Harsh. This is Eric. We are continuing to see strength in our share at Samsung as well as in greater China, of course, building on the foundation that was really put in place over the past several quarters.

We are very excited to be ramping business at LG. We’ve been pointing to that for a couple of quarters. That has begun to become commercial in the June quarter and will continue to grow strongly from here forward.

Also, HTC is ramping up nicely for us in several slots. And Sony-Ericsson continues to be a growth driver as well.

So it is across a very broad range of customers as Bob said.

Harsh Kumar – Morgan Keegan

Thanks guys. Good job. Thank you.

Operator.

Thank you. And our next question comes from the line of Anthony Stoff with Craig Hallum. Please go ahead.

Anthony Stoff – Craig Hallum

Hi, guys. If you don’t mind talking about kind of your plans on cost reductions to try to keep bumping up gross margins? And Dean, is it fair to assume that you continue to drive, or move away from transceiver business that your gross margin should really move towards that 42% like you highlighted on a non-GAAP basis?

Dean Priddy

Yeah. I think, you know, special importance is our core business, which excludes the effect of transceivers. And gross margins there are already at 42% and operating margins of 18%, which very closely mimics our recently updated financial model.

You know, we’ve got several drives on gross margin going forward, of which, you know, obviously product mix is one of the biggest ones. Continuing to ramp facilities is also another major driver, it’s blocking and tackling.

It really comes down to new products, what’s in the pipeline, and the product leadership. I think that’s where, you know, RFMD sets themselves apart, and you know, we talk about all the new products that we’re bringing to market. And these products are going to have accretive gross margins to company averages.

So I think we’re very excited, PowerSmart is included in that. That’s obviously going to be a huge ramp for the company. But I know Bob and Van Buskirk has numerous products in the MPG organization that are accretive to corporate margins and ramping nicely as well.

Anthony Stoff – Craig Hallum

One last question. What was you 2G/3G split at business end. And also in terms of design activity, is it on a similar mix, or is it more skewed towards 2G going forward?

Eric Creviston

This is Eric. We have a split right now of about 75% to 80% in terms of both new product releases and design wins. And that’s 75% to 80% 3G versus 2G.

Current revenue split is a little higher in 2G, especially last quarter, we did see some, again, continued share gaines there. But there’s not question, momentum is shifting rapidly to 3G and 4G.

Anthony Stoff – Craig Hallum

Great. Thank you.

Operator

Thank you. And our next question comes from the line of Bank Masini with JP Morgan. Please go ahead.

Bank Masini – JP Morgan

Hi. Thanks for taking my questions. Dean, perhaps you could comment on your normal seasonality for the September quarter. What does it typically? And then what is your guidance related to normal seasonality? And what are the various factors that go into play when you say that September quarter will be in line with June?

Dean Priddy

Well, I think since Eric Creviston has some data he’s gone back and looked at, now this is seasonality for cellular product, more cellular than just the company, the total company. But Eric –

Eric Creviston

Yeah. Just looking over the data for the past ten years or so, there has been generally a seasonality in the September quarter versus June of about mid-single digits increase on average. And I think what we’re expecting from the cellular market this September is pretty much in line with that.

Bank Masini – JP Morgan

Okay. That’s helpful. And then from an MPG perspective, could you comment on what the expectations are? And also, if you could give the split between CPG versus MPG revenue, that would be great.

Bob Van Buskirk

Hi. This is Bob Van Buskirk. The seasonality in MPG is generally looked at in kind of a calendar quarter perspective in that typically for us, the second half of the calendar year is the strongest six months of the year. And it typically would grow around 10%, 8% to 10% over the first half of the year.

So we’re off to a good start in the first half of this calendar year, and hopefully we’ll get a more typical seasonality and see some continued growth.

The current split between MPG and CPG is about 80/20, in that range. And we expect with both of our businesses growing, to stay in that range the rest of the fiscal year.

Bank Masini – JP Morgan

Okay, great. Thank you.

Operator

Thank you. And our next question comes from the line of Scott Searle with Merriman. Please go ahead.

Scott Searle – Merriman Curhan Ford

Good afternoon. Hey, just a quick clarification on the 18% sequential growth ex-Nokia. Is that CPG or is that corporate wide ex-CPG?

And then if you could, on the Asian front, specifically as it relates to MediaTek, provide a little bit more color in terms of what you’re seeing in the China marketplace particular with MediaTek going through a product transition issue right now. Is that impacting you? Will you see things snap back as we go into September? And kind of how the growth was in June versus March, and what you’re expecting in September?

Bob Bruggeworth

Dean, why don’t you take the first part. Eric, you go ahead and take the second part.

Dean Priddy

Yeah. Scott, the 18.3% was combined company, both CPG and MPG, X or largest customer.

Eric Creviston

And regarding what we see in the China marketplace, to give you a little more color there, we are doing quite well in China as we have for several quarters. And that is on the back of the total demand in China. MediaTek is certainly the largest by far, but there are other suppliers, Fred Truman and Fenian in particular. They’re also shipping into that region and our titrate has been very strong with all the horses there. So that’s benefited us going forward.

I think what’s really exciting us now is the emergence of the 3G entry category. And it’s all of our customers now that we’ve established a very strong presence in 2G as they begin to really look right now and focus their R&D teams on 3G, and we look at what’s going to happen in that market next year, we’re very well positioned on all the reference designs, including MediaTek’s 3G reference design as we mentioned.

And we think that market’s going to explode next year, and we’re very well position to benefit from that.

Scott Searle – Merriman Curhan Ford

Eric, are you continuing to gain share with MediaTek in China? Or are you expecting that to be sequentially up for you guys into September?

Eric Creviston

Yes. Let’s talk about China in total instead of just MediaTek because we mentioned that in China, in total, we definitely were a share gainer last quarter, about another 5 points, we think. And we think the trajectory is still in our favor there.

Scott Searle – Merriman Curhan Ford

Great. Thank you.

Operator

Thank you. And our next question comes from the line of Todd Kaufmann with Raymond James. Please go ahead.

Todd Kaufmann – Raymond James

Thank you very much. You gave a little bit of color about accelerated growth in Fiscal 2012, which seems a little bit far out. I was wondering if you could give a little bit more color about full year Fiscal 2011 growth?

Bob Bruggeworth

Dean, I’ll take a shot at this. What we said publically is we expect to grow in Fiscal ’11, and we expect our earnings per share to grow at least double digits this Fiscal year. So Todd, you know, we’re giving you kind of color on the first quarter, color on the second quarter. You know, Dean already commented, we’re not going to call too much about December. And seasonality in March is way too early to call.

But we’re confident in our ability to grow our fiscal year even with the strong roll off that Eric talked about in our Polaris revenues declining this quarter, December, and again in March.

So we’re seeing pretty good growth outside of – let me put it this way. We’re seeing very good growth in our core business through the rest of the year. And we expect that to continue and actually grow faster in ’12 versus ’11.

Dean Priddy

Yeah, and just to add a bit to that, a comment on the earnings growth, we’re committing to double-digits earnings for share growth this fiscal year. So with that said about a December quarter, I think the contribution from Polaris in terms of earnings is going to be negligible. In fact, I think it’s going to be probably a penny or less in terms of EPS impact to the company.

So we’re managing through this transition, if you will, with legacy products. And coming out the other end a much more diversified, a very profitable company that’s generating superior cash flow that’s set up for substantial growth going into FY12 with the new programs that we’ve already got locked in.

Todd Kaufmann – Raymond James

That’s very helpful. Thank you for the color. Just a quick follow up. When you call out the Fiscal 2012 new business opportunities design wins that you called out earlier, it seems as though the design wins you’re getting have a little bit more visibility today than the design wins of power amplifier and handsets, say three, four, five years ago.

Is that fair that maybe you might have a little bit longer lead time in your design wins, or – 

Dean Priddy

No. It’s pretty much what it’s always been.

Bob Bruggeworth

In some ways, we have a little better visibility. However, what I want to caution you on, is it’s our tone. What we believe is investors are not clear in where we’re winning outside of our largest customers. They’re not sure of the sizing of that. So we’re providing a little more color than we have in the past. I think that’s the primary reason.

As far as a little more visibility, it is a little more complicated to launch some of the 3G phones. So we have a little more visibility into that. But I think what I really want you to take away from this is we’re confident in our ability to grow this year and next year. And that’s the color we wanted to add around this more than “visibility”.

Todd Kaufmann – Raymond James

Thank you very much. Good luck.

Operator

Thank you. And our next question comes from the line of BJ [Ricash] with Stern Aggie Leach. Please go ahead.

BJ [Ricash] – Sterne Aggie Leach

Yeah, guys. I’m just wondering, who your 10% customers were and what presentation those guys were?

Dean Priddy

We had one greater than 10% customers for the company during the quarter.

BJ [Ricash] – Sterne Aggie Leach

And was that greater than 50, or under 50% now in the quarter?

Dean Priddy

We mentioned that Nokia, it was greater than 10% customer, it’s 43 1/2% of revenue.

BJ [Ricash] – Sterne Aggie Leach

Oh, okay. So that has come down quarter and quarter, it looks like for you?

Dean Priddy

It’s come down from 59% the same quarter a year ago.

BJ [Ricash] – Sterne Aggie Leach

Um-hum. And if you look at the six-inch production, now that you’re all at six-inch production, what’s the capacity utilization and how much can you take on in the top line with the listed capacity?

Dean Priddy

Yeah, our capacity utilization is in the mid-70s. So you know, Gan’s capacity if not an issue for the company, and particularly as our dye continued to get smaller. And we’re probably about in the six inning of that transition to smaller-sized dyes.

So we’re in very, very good shape for – in terms of Gan capacity for the foreseeable future. We’re very much willing to take new business on.

BJ [Ricash] – Sterne Aggie Leach

Got it. And then my last question here. When we look at China, you said you gained 5 points a share last quarter. Exiting the year, what do you think that share will be in China?

Bob Bruggeworth

I think we’ve said our target is to be in the 40% range, and we’re very confident that that’s quite achievable.

BJ [Ricash] – Sterne Aggie Leach

And where are you now in China?

Dean Priddy

We’re in the 35% range today.

BJ [Ricash] – Sterne Aggie Leach

Okay, great. Thanks a lot, guys. Good call.

Operator

Thank you. Our next question comes from the line of Nathan Johnson with Pacific Crest Securities. Please go head.

Nathan Johnson – Pacific Crest

Hi. Thanks for taking my question. I just want to turn quickly back again to your largest customer. You guys talked about next quarter, them being below 40% of revenue. I was wondering if that is fully attributable to the Polaris roll off, and more specifically what that delta would look like if we were to exclude Polaris?

Dean Priddy

I don’t think – it’s not 100% attributable to the Polaris roll off. I mean, the results of the customer have been reported. And you know, I think they speak for themselves, and you should be able to connect the dots. I think that’s enough color to add on this particular customer.

Bob Bruggeworth

The only thing I’d like to add is being – also, you know, when you grow over 75% year over year outside your largest customer, you know, you’re obviously gaining a lot of share faster than the market and it drives down their percentage even if their business was growing.

I think to Dean’s point, you know, what we want to make sure you get a good feel for is Polaris’ rolling off, yes our shares come down a little bit of our largest customer, but the real headline is we are growing extremely fast outside of our largest customer.

Nathan Johnson – Pacific Crest

Great. This is helpful. And then I was just wondering if you could provide maybe a bit more numbers around the Gan process that you guys have launched. Is it big enough that you can share how much revenue that process is contributing, both for your own products and then the foundry business?

Bob Van Buskirk

Hi. This is Bob Van Buskirk. Well, we’re pretty excited about this quarter in terms of Gan product launches. And we actually have secured our first Gan Foundry customer this quarter also. But at this point, it’s not at a point where it’s meaningful enough to break out separately, but I think that point in the future is not far away.

Nathan Johnson – Pacific Crest

Great. Thanks so much.

Operator

Thank you. And our next question comes from the line of Quinn Bolton with Needham and Company. Please go ahead.

Quinn Bolton – Needham & Co.

Hey, Bob. Just a quick clarification. You [inaudible] sort of the five Fiscal ’12 customer wins; RIM, Motorola, Nokia, MediaTek and Qualcomm. And I just wanted to clarify, did you say that those opportunities were 250 million, or were those five programs part of the 77% year-on-year growth that you’ve already seen outside of Nokia?

Bob Bruggeworth

Yeah. The five rough areas that I spoke about is – that is outside of that growth that we’ve already experienced. It will layer on top of that.

Quinn Bolton – Needham & Co.

Great. Okay. So that’s a Fiscal ’12 kind of growth opportunity?

Bob Bruggeworth

Correct.

Quinn Bolton – Needham & Co.

And then sort of a question on that. Can you quantify how much, and if you can’t quantify, maybe qualitatively talk about, how important is a PowerSmart product in those incremental $250 million opportunities? Is that a significant portion of those design wins? Are you seeing strength across the entire product portfolio with those customers?

Dean Priddy

One thing I just want to make sure my actual comments were along the lines of at least $250 million. So it’s not – it’s at least $250 million.

PowerSmart does play a key roll in that, but I think what’s important is that what we’ve talked a lot about is our customer diversification and our product leadership. So 3G entry is a big part of that. We continue to lock down designs there. Our SSPL, that’s our Switch and Signal Conditioning Product Line, through the ARC Power Management, and switches which filter modules, etcetera, drive some to that growth.

And I’ll let Eric talk about PowerSmart as well.

Eric Creviston

Sure. PowerSmart is very much on track. The customers that we’re working with clearly are struggling these days. I’m sure it’s no surprise that current consumption and talk time on the handset is a big issue as well as thermal issues, size, complexity and so forth.

So all of that is addressed directly by PowerSmart. We mentioned we’ve got five major smartphone OEMs already building phones with the product. And everybody, I think, is really starting to see the benefits. So we’re picking up steam. It’s accelerating. We’re still on track to ramp in the March quarter with our first customer. And then we’ll be ramping the others throughout 2012.

Quinn Bolton – Needham & Co.

Great. And then just lastly for Eric. I think you mentioned that you may have a leading position on MediaTek’s new single chip platform. Can you just confirm if that’s what you said? And if so, what kind of opportunities? It sounds like MediaTek may have a pretty strong transition over to that product line for the entry level in China.

Bob Bruggeworth

This is Bob. I did make the comment that we had the lead on their 3G platform. I also want to make sure it’s clear that those are discreet PAs for the 3G entry segment. So that’s not the PowerSmart that we talked about.

Quinn Bolton – Needham & Co.

Okay.

Bob Bruggeworth

I’m sorry. There was a second part to your question. I may have missed it.

Quinn Bolton – Needham & Co.

Oh no. I’m sorry. I wasn’t sure, either Bob or Eric, whether you were talking about the single chip GNG [inaudible], basically a transceiver product for MediaTek, or whether your comment was you had the lead on 3G SoC at MediaTek.

Bob Bruggeworth

Yeah, we were actually referring to both of those platforms.

Quinn Bolton – Needham & Co.

Okay. Great. Thank you.

Operator

Thank you. And our next question comes from the line of Tore Svanberg with Stifel Nicolaus. Please go ahead.

Tore Svanberg – Stifel Nicolaus

Hi guys. This is Eric calling in for Tore. I just want, quickly, a point of clarification of the guidance for the September quarter, reason for the flat issue is really more of a – we’ll call it a mix where you’re starting to see a little bit less contribution for the Polaris business, but certainly some growth in the core market. Is that true?

Dean Priddy

Yeah. Absolutely clear. Core business, we expect to grow, and legacy products, we expect would be in decline mode in the September quarter.

Tore Svanberg – Stifel Nicolaus

Great. Okay. Thanks. Getting back to a question that was just asked about the PowerSmart, you’re thinking that you’re going to see a ramp in the March quarter. But in terms of general comments, how does that this configurable PA change the dynamics of the market? Maybe just kind of give us just a little color there.

Eric Creviston

Sure. I’d be happy to. The key to it really is the new architecture which we call the configurable power core. So it’s beyond the power amplifier itself. The real key is the integration of the RF power management that we’ve been investing in for five years now, and we’ve got a lot of intellectual property built and a good amount of commercial practice developed there.

So it’s a tight integration there that allows us to – really, that combined with our broadband quadrature PA architectures which are well proven in the field to be very, very good at performing in the real-world conditions where there’s antenna [inaudible] and poor signal condition and so forth. So when you put those two things together, we really have a solution which allows customers to be very flexible in the platform nature of their products. And have a product which can be adapted to various different user modes, or different conditions, or regions, or carriers expectations all over the world.

So it changes really the dynamic from having to go into the lab and tune what the hardware, and fine tune every discrete power amplifying for each individual mode and band to a given performance, and therefore, sacrifice everywhere else, to one amplifier which can be configured on the fly to be optimum for whatever the phone is doing at that moment; whether it’s data, or it’s voice, and whichever region it’s in, and so forth.

Tore Svanberg – Stifel Nicolaus

Would you think that this is kind of like game changer in some ways, or you wouldn’t categorize it as that? Just obviously, it’s more flexibility?

Eric Creviston

It’s absolutely a game changer. There’s no question at all about it. The fact that it’s adaptable and as I mentioned, literally on the fly, between bursts, you can configure the thing to be optimum for whatever you’re doing at that moment.

So in terms of total power consumption in the handset in the real world overall use condition, it is dramatically lower.

Tore Svanberg – Stifel Nicolaus

Who do you see as your direct competitor right now, or are you guys kind of in the lead at this point? Just help us understand that competitive nature. Thanks.

Eric Creviston

There’s two competitive approaches to this, and both are different from what we’re doing. One is a converged tower amplifiers, which are different from the converged power cord because they don’t actually include the power management. They rely on a third party to provide the power management for them. And so we don’t believe that they’ll be nearly as competitive as we will with our intimate integration of the two.

But they’ll be on the market as well, and shipping, and still providing a lot of flexibility in terms of the architecture.

And then the other approach is what we would call a hybrid approach, where people will do multi-mode power amplifiers by just putting a bunch of power amplifiers into one package.

And of course, we think the complexity in routing through that, and the performance improvements will simply not be there with that approach.

So there’ll be other ways to address the phone layouts. But there’s many, many advantages to the PowerSmart approach besides the one I’ve mentioned. For example, factory calibration with our Power core architecture, you can essentially calibrate the phone in one mode and the others sort of come for free because it’s one amplifier. And that’s going to also bring tremendous advantages that the competing approaches can’t really address.

Dean Priddy

Some of the competition doesn’t have the RF Power Management piece and the converged PA piece. That may be why they’re not seeing the kind of efficiency that they would characterize as world class.

Eric Creviston

I think that’s really the key.

Tore Svanberg – Stifel Nicolaus

Okay. Thank you. That’s helpful.

Operator

Thank you. Our next question comes from the line of Tim Luke with Barclays Capital. Please go ahead.

Tim Luke - Barclays Capital

Thank you so much. I was just wondering if you could maybe clarify the size, or the approximate range of revenue of the legacy businesses? And maybe, Bob, you could give a framework, just to remind us when you expect that to be wound down.

Dean Priddy

Yeah, Tim. We’d be happy to repeat some of that for you. The current size of the legacy business is close to 15% total revenue today. And Eric, if you want to walk him through what you did earlier?

Eric Creviston

Yeah. The ramp down will be close to – that business will be close to 10% of revenues this quarter, well under 10% in the December quarter, and then well under 5% in the March quarter.

Tim Luke - Barclays Capital

That’s very helpful. Thanks. And Dean, can you just clarify the – it looked like the margins are flat, but slightly lower in the quarter on the gross margin side. How do you see that in September?

Dean Priddy

Well, yeah. You know, not to get into a June-September type discussion, I think the margins overall are heading more towards what our core business is operating at, which was 42%.

So it really comes down to mix and the significant margin drag that the transceiver business has on overall corporate gross margins. So you know, obviously that’s not going to go away completely until like the March quarter, or whatever.

But I think that the real – what investors are really interested in is, you know, we get through this transition period, what’s RFMD going to look like from a business model. And that’s what we look like today, 42% gross margin.

Tim Luke - Barclays Capital

So you’d expect the growth margins with the lower legacy to be up in the coming quarter?

Dean Priddy

The gross margin’s ex-legacy product will be –

Tim Luke - Barclays Capital

Well, you’re saying there’s going to be less legacy, right? You’re saying that’s going down as a percentage of the revenue?

Dean Priddy

With the less legacy –

Tim Luke - Barclays Capital

Is there anything else we should be aware of?

Dean Priddy

With less legacy, the trajectory on margins is biased to be up. Correct.

Tim Luke - Barclays Capital

Okay. And maybe you could just help us on the [inaudible] side. Should it be fairly flattish as well?

Dean Priddy

I think plus or minus a million, or a million and a half or so dollars a quarter.

Tim Luke - Barclays Capital

Okay.

Dean Priddy

We have some investment here that we want to continue making in the future of the business. And we want to maintain our industry leading R&D investment to own the front end and to continue growing our MPG business faster than their end markets.

Tim Luke - Barclays Capital

And would you expect the inventory levels to remain very flattish in the channel, or have you been going through a period for the industry where there’s been some need to grow inventory approaching the holiday season?

Dean Priddy

Well, if you’re talking about the complete channel, we don’t always have 100% visibility into the total channel. But we got very good visibility into our own inventory levels because of the hubs that were owned. And what I would expect for the September quarter is for inventory turns to once again improve. In fact, I think inventory turns were the highest this past quarter that they’ve been in over two years. Inventory actually grew less than what our sales grew.

So you know, depending on the outlook of the December quarter, you know, that’s how we’ll drive inventory. But we do expect an improvement in turns in the September quarter.

Tim Luke - Barclays Capital

Thank you so much.

Dean Priddy

Thank you, Tim.

Operator

Thank you. And our next question comes from the line of Michael Burton with FBN Securities. Please go ahead.

Michael Burton – FBN Securities

Hey, thanks, guys. And congrats on good results. Your largest competitor spoke about some weight from assembly constraints that they’ve bee able to avoid. Can you talk a little bit about your positioning internally versus externally and both as it relates to [inaudible] test as we approach the season in a strong second half? Thanks.

Bob Van Buskirk

This is Bob Van Buskirk. I’ll go ahead and take that one. From a [inaudible] prospective, Dean’s already commented. We were running at about, you know, mid-70s type of utilization there. And also with the work that we’re doing to increase the number of dye per wafer through our dye-shrink technology. We’re in about the sixth inning. So from a gallium-maricinite perspective, we feel very comfortable with our capacity to support the growth that we talked about the rest of the fiscal year, along with next fiscal year.

As far as the outsourcing goes, from a flex-source hybrid manufacturing if you will, we have been using outside assembly and tests for some time now. And you know, I think we talked last quarter that, you know, we basically grow our capacity outside and if they don’t meet our cost, we’ll make the investment.

So for right now, you know, bring on the growth, as Dean said. We’re ready.

Michael Burton – FBN Securities

Okay. So there’s not a problem with external classing right now, or is there things that you guys are doing maybe proactively internally?

Bob Van Buskirk

Not for RFMD, and I think, you know, we’ve commented before about supply chains and how important it is to be very flexible and agile, and to have the way with all to be able to get what you need when things do get tight in the industry. And we’re getting what we need.

Michael Burton – FBN Securities

Okay, great. And lastly, can you just kind of ballpark maybe for us the size of MediaTek for your revenues, or I guess China in general? Thanks.

Dean Priddy

Yeah, clearly the China market continues to grow. But we don’t really like to single out just MediaTek because as Eric pointed out, we also sell into other baseband supplier in the region as well. Needless to say, our market share there continues to increase and it’s not peaked by any stretch.

Operator

Thank you. And our next question comes from the line of Aalok Shah with D.A. Davidson. Please go ahead.

Aalok Shah – D.A. Davidson

Hi, guys. Congrats on the quarter. A couple of quick questions for Eric. Eric, first of all, can you see anything in the market place right now that would really cause you to be more cautious in terms of just inventory for handsets, or anything along those lines?

And the second question is, there’s some noise about your market share at MediaTek, and what it potentially could be. Could you maybe kind of give us a sense of what you think your ramp at MediaTek could look like at least. And then maybe what you think the reference designs share could be at MediaTek as we go into next year?

Eric Creviston

Sure. So starting with the question about handset inventory, there’s nothing going on right now that really gives us unusual concern. There’s always, you know, a steep ramp in the second half of the year, and people are jockeying for position, of course, and competing against each other. But we have a pretty good view there, and there’s no unusual activities.

As Dean said, when it comes to managing our own channel, we have, in the cellular business, half our business is on customer hubs, so we actually see their production plan on a weekly basis and we’re able to manage through that.

Another 30% of our business is through distribution channels in China, and other places. And we’re able to, again, get weekly views as to the pulls there.

So we’re not just taking purchase orders and following them by any means. The vast majority of our business we actually see the production plans and the – really, the daily pulls so we can monitor that.

The second question about the noise on our MediaTek share, I’m not sure what noise there is there, but it seems like it’s been pretty clear to us. We told you that we had brought out 15 new products to support MediaTek, and we continue to focus a great deal of our R&D, and in particular, our Shanghai Research and Development Center on the MediaTek customer base, and our share there is strong and growing.

As I said earlier, we’re very excited about the roll out of 3G entry. We think that’s another phase of content expansion for us. And given our – at this point in time, I think we’re kind of the home team for that one. So we’re very, very excited about that.

Aalok Shah – D.A. Davidson

Okay, great. Thank you.

Operator

Thank you. And our next question comes from the line of Amy Northorth with Pilot Advisors. Please go ahead.

Any Northorth – Pilot Advisors

My question has been answered. Thank you.

Operator

Thank you. (Operator Instructions)

And our next question is a follow-up question from the line of Harsh Kumar with Morgan Keegan. Please go ahead.

Harsh Kumar – Morgan Keegan

Yeah, hey guys. A couple for you. It may be too early to talk about this, but can you talk about the gross margin impact of PowerSmart itself as it ramps and how you see that going?

And then another question and clarification, the five, or four opportunities you talked, RIM, etcetera, are they secure design wins or are they kind of opportunities? Just any color would be nice.

Dean Priddy

Harsh, first on gross margin, I think investors are really going to like what they see as PowerSmart beings to ramp. So definitely accretive to corporate gross margins in a meaningful way.

Eric Creviston

And regarding the five opportunities that we said before, as you know, Harsh, we’re pretty conservative with our stance on design wins, and we don’t call it a design win unless we’re very close to production

Having said that, several of those are design wins, yes. So they’re very, very far along and very mature. Others are not so much, but a great deal of interest in still getting that design into what you might call the platform phase before it actually goes to a handset product design win phase.

Harsh Kumar – Morgan Keegan

Got it. And one last one for you, and then I’ll hope off. From a customer angle, what’s there for the customer to sign up for PowerSmart? You obviously talked about lower power consumption. Are they actually getting some sort of a price incentive to move to PowerSmart? Just maybe elaborate from a business angle what’s in it for the actual customer?

Eric Creviston

Sure. There’s the benefits that we hit on before. They’re really is a significant savings in terms of current consumption across the real life of the phone in terms of different usage scenarios and also over different battery voltages and so forth.

So in the real world, you see a very significant improvement in the power profile of your smartphone. Besides advantages as well in the past, we talked about 35% to 40% savings. I think that’s clear when you look at the layouts of a converged solutions such as ours.

Factory calibration time is not to be taken lightly. The smartphones can cost a lot of money in terms of factory calibration time, and this is a dramatic improvement there. So that’s the significant cost savings for them.

And so really, I think when you look at that all put together, it’s a quite compelling argument in terms of what the customer gets of PowerSmart.

Harsh Kumar – Morgan Keegan

Got it, guys. Thank you, and thanks for all your help.

Operator

Thank you. Our next question is a follow-up question from the line of Scott Searle with Merriman. Please go ahead.

Scott Searle – Merriman Curhan Ford

Hey, a quick follow up guys. A little bit different, but you know, given what you’ve done on the balance sheet over the past six to eight quarters, you know, what are your thoughts in terms of use of cash as you start to get to a net positive position from a cash standpoint? How does a buy-back fit into your priorities? I mean, how are you thinking about things on that front? Thanks.

Dean Priddy

Well, I think it’s been outlined in the recent bond repurchase. All of our options are open. You know, we look at opportunistically repurchasing bonds. We evaluate share repurchases, and we’re going to take a certain amount of the free cash flow and invest into the business, rather that’s organic growth or through a highly accretive or quickly accretive acquisition.

So all of our options are on the table, and open for us to be able to execute them.

Scott Searle – Merriman Curhan Ford

Great. Thanks.

Operator

Thank you. And our next question is a follow-up question from the line of Anthony Stoff with Craig Hallum. Please go ahead.

Anthony Stoff – Craig Hallum

Hey, Dean, quickie for you. So when you move away from the transceiver side, any OpEx reductions that might be felt, or are you going to redeploy that towards the MPG side?

Dean Priddy

That’s fairly insignificant OpEx reductions and probably already deployed somewhere in the company.

Anthony Stoff – Craig Hallum

Okay. Great. Thank you.

Dean Priddy

Thank you.

Operator

Thank you. And our next question comes from the line of Cody Acree with Williams Financial Group. Please go ahead.

Cody Acree - Williams Financial Group

Hey, guys. Congrats. One quick question on market share. You always compared it against, obviously your biggest customer, our biggest competitor Skyworks But what about the gap now that’s been created technology between where you’re sitting and Skyworks is sitting, and the other power amp suppliers out there? Is there room yet for you without being a you and Skyworks battle to continue to take share?

Bob Bruggeworth

Cody, could you explain a little more about your question concerning, you said technology gap, you’re talking about can the two of us continue to distance ourselves from our competition?

Cody Acree – Williams Financial Group

Yeah. I guess what I’m saying is that you, given your size and just sheer critical mass are doing things that others in the industry might not be able to do.

Eric Creviston

This is Eric. I’ll be happy to take that. That dynamic equivalence playing out as the complexity continues to grow, you have solutions such as PowerSmart, which is really a completely integrated front-end solution. Customers are more and more looking to us to truly own the entire front end, which includes the system engineering, all aspects of the front end; power amplifiers, power management, switches, filters, duplexers and etcetera. So that does require a certain amount of scale, both in R&D, but in production capacity as well.

And we see that really going both ways, down into the entry 3G segment, of course, because there you want a lot of different versions, very rapidly assembled for the entire front end. And then all the way through 4G. When you look at TDLT systems, for example, the amount of engineering in our front end is significant, and it takes a certain amount of scale and investment level to be able to do that well.

Cody Acree – Williams Financial Group

All right. Great. Thanks.

Operator

Thank you. And our next question is a follow-up questions from the line of Parag Agarwal with UBS Securities. Please go ahead.

Parag Agarwal – USB

Hi. Just a few more questions about PowerSmart. On the AESP side, how does it compare to a comparable product in the sense that if it is PowerSmart, it is [inaudible] amplifiers. What would be the cost of that installation?

And secondly, you have talked about the advantages of PowerSmart. I’m just wondering if there are any downsides of using PowerSmart?

Eric Creviston

Your first question was regarding the ASP, is that correct?

Parag Agarwal – USB

Yes.

Eric Creviston

Given all the benches we’ve set, including size, savings, ease of complexity in forward routing, and savings in calibration, I don’t think there’s any reason to expect that we would sell it any cheaper than any other solution on the market.

So if you look at our up-front in contact [inaudible], $5.00 to $7.00 for these multi-band, multi-mode smartphones. That’s the range you’re in for the entire solution.

To be clear, the first versions we’re ramping next year, we’ll be supporting the Power Cord in the first phase, which is roughly half that content. And then as we go into FY’13, we’ll begin to ramp the rest of our solution, which includes the switch duplexer module, which would accompany that. Which then we would address the full RF content.

And the question you asked was whether theres’s a downside. If there is, it is the requirement for coordination with the total system. This is not something that can be dropped in overnight, for sure, and it does require close coordination with the system or the baseband in transceiver integration. Luckily, we’ve got several baseband manufacturers eager to do that integration with us.

The improvement that they see is the system is well worth it. So it does take a little more time. As I said, we’ve been investing in this for five years. This is not an overnight success by any means.

So I think once that integration is done, I think the customer is going to be nothing but upside.

Bob Bruggeworth

Yeah. The early adopters tend to be the more RF savvy customers.

The one thing I do want to caution everyone on in making sure that, you know, if you’re going to have one or two bands of wideband CMA, PowerSmart may not be the right product. And what Eric talked about is really it has more to do with some of the – when you want quadband, GSM, plus, you know, multiple bands of wideband CMA and if you wanted to add on LTE.

So if you called it a – something that maybe wasn’t favorable for it, if you’re only going to have one or two bands of wideband CMA, you may choose a discreet solution.

Eric Creviston

That’s actually an excellent point, and I don’t mean to imply that our entire 3G portfolio is only going to be PowerSmart.

We’re going to support the discrete PAs, especially the 3G entry category, of course, and the future phone category where there’s one or two bands, and for emerging applications, there will always be discrete PA that are both on and so forth.

So it doesn’t do everything. We come to work every single day focused on reducing power consumption and complexity for our customers, and PowerSmart is one of the big tools in our toolbox that we’ve got a very full toolbox.

Operator

Thank you. And there are no further questions in the queue. I’d like to turn the call back to management for any closing remarks at this time.

Bob Bruggeworth

Thank you for joining us tonight. We believe our June Quarterly Results clearly demonstrate our ability to deliver profitable incremental revenue growth, while the roll off of legacy products have begun, we’re taking control of our sales trajectory through the share gains, new product cycles and expansion in the new growth markets. We’re offsetting end-of-life products with exciting incremental wins and we’re on track to deliver revenue and earnings growth in Fiscal 2011 as we transition to a much more diversified revenue base.

When the roll off of legacy products is complete, in early Fiscal 2012, we’re anticipating an acceleration in revenue growth driving continued margin expansion.

Thank you, and good night.

Operator

Thank you. Ladies and Gentleman, this concludes the RF Micro Devices First Quarter 2011 Conference Call.

To listen to a replay of today’s call, please dial 303-590-3030, or 1-800-406-7325 and enter the access code of 4326183, followed by the pound sign.

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