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Executives

Steve Buhaly - CFO

Ralph Quinsey - President and CEO

Analysts

Edward Snyder - Charter Equity Research

Jeff Kvaal - Lehman Brothers

Aalok Shah - D.A. Davidson

Amit Kapur - Piper Jaffray

Steve Ferranti - Stephens Incorporated

Pierre Maccagno - Needham & Company

Scott Jones - JPMorgan

David Kelly - Boston State Street

Alex Woodward - Mazama Capital

TriQuint Semiconductor Inc. (TQNT) Q1 2008 Earnings Call April 23, 2008 5:00 PM ET

Operator

Good afternoon. My name is Don, and I will be your conference operator today. At this time, I would like to welcome everyone to the TriQuint Semiconductor first quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Mr. Buhaly, you may begin your conference.

Steve Buhaly

Thank you. Good afternoon and welcome to our first quarter 2008 conference call. This call will include forward-looking statements about TriQuint's projected financial and operating results and the financial impact of the WJ Communications acquisition, among other things.

Results could differ materially based on various factors, including those variables and risk factors described in TriQuint's reports on forms 10-K and 10-Q and other filings with the Securities and Exchange Commission, and in the case of WJ Communications acquisition, our success in integrating the acquisition and realizing the expected synergies.

This presentation also includes non-GAAP financial measures, which exclude equity compensation charges. These non-GAAP measures are provided to enhance the user's overall understanding of our core operating performance. A full reconciliation of these non-GAAP measures can be found in our press release.

Ralph will now provide an overview of the quarter.

Ralph Quinsey

Thank you, Steve. TriQuint delivered a solid quarter in Q1, with revenue of $111.1 million and earnings slightly better than our original expectation. Our revenue was down sequentially, as we had projected, due to normal seasonal declines typical in the March quarter and customer inventory adjustments discussed on our last earnings call.

Gross margin percent was down sequentially, but better than expectations at approximately 35%, due to favorable product mix and good factory performance.

Operating expenses were slightly higher than our prior quarter, as we maintained spending focused on growth in the second half of 2008 and beyond.

New product revenue, defined as revenue from products introduced within the previous two years, declined in Q1 to 38%. This decline was mix related in our seasonally down quarter, and I fully expect this metric to return to levels above 50% in Q2 and beyond.

For the quarter, we generated GAAP earnings of $0.03 and non-GAAP earnings of $0.05, both just above our previous guidance. The recently announced acquisition of WJ Communications accelerates our strategy bringing module solutions to the infrastructure market and expands our RF product development capability.

I expect this transaction will close in late May. This acquisition secures our place as the number one provider of RF products for non-handset markets. We expect cash synergies of approximately $8 million per year in 2009, primarily from G&A.

During the quarter we increased our cash and investments by approximately $15.9 million to a total of $219.4 million.

Steve will provide details of our financial performance during his comments.

As the world transitions from mobile voice to mobile data, TriQuint is capitalizing on our broad technology portfolio by supplying our customers with some of the most highly-integrated front-end modules available.

By integrating more of the RF solution into a single module, we are helping our customers reduce time to market and minimize board space required for the RF portion of their application.

The RF market is growing, with added content per application. Third-generation cellular handsets, or 3G phones, have three to four times the RF content of previous generations and new standards in Wi-Fi, particularly 802.11n, expand RF content in laptops enabled for wireless mobile computing by 2X to 3 X. These multiband and multimode applications are accelerating RF demand and creating growth opportunities for TriQuint.

We have been a leader in supporting these new applications with highly-integrated, cost-effective solutions. In Q2, we expect to ramp revenue driven by new products and new customers for 3G and 802.11n. We have orders in hand, and our supply chain is filling in anticipation of some specific and sizable programs in these two markets.

Additive to this, we have healthy activity in our military market and solid demand for our foundry products. It is a busy and exciting time for TriQuint, and I'm proud of the effort our employees have mounted to fuel this growth.

TriQuint has expanded our broad technology portfolio during the quarter with the launch of several new processes. Our [bihands] technology is a combinational technology suitable for integrating more functionality on a single GaAs dye. This lowers costs and reduces product size, helping our customers get more for their money while allowing TriQuint to bring more value to our shareholders.

We also introduced TQP13N, a low-cost, 6-inch process that delivers the high performance of an EB gate process at a very competitive price point by using optical lithography. This technology is well suited for millimeter wave applications, such as point-to-point radio, and is capable up to 95 gigahertz.

Handset revenue was approximately flat in Q1 of 2008, as compared to Q1 of 2007. GSM/GPRS revenue was lower due to previously-discussed customer-specific inventory adjustments in the quarter. Slightly lower CDMA demand was offset by a 20% growth in 3G revenue as compared to the first quarter of 2007.

Our handset wireless LAN revenue increased significantly in Q1 and now represents 5% of our total handset revenue. We saw higher demand for foundry wafers in the quarter for handset applications. Overall, our handset product mix continues to migrate towards integrated modules known as transmit modules, front-end modules or SIP, system-in-a-package modules.

At the GSMA Mobile World Congress in February TriQuint announced several exciting new products. These products targeted the ultra low-cost market, EDGE solutions, and included a complete 3G seven-band solution in an elegant four module chipset.

I am happy to report we have solid interest from multiple customers for these products, including our highly-integrated TRIA modules for the 3G applications, and we expect a revenue ramp to begin in Q2 with both existing and new customers. These modules allow our customer to improve their time to market and design smaller feature-packed phones by providing the complete transmit change including PA-Duplexer, enter-stage filter and other functionality in a space-saving 7 x 4-millimeter package.

Looking to the future, we have an integrational roadmap for our tridion modules that reduces size and costs beyond what can be achieved with standalone discrete components.

Our revenue in the networks market was up 11% in Q1 of 2008, as compared to Q1 of 2007. The increase was driven by strength in wireless LAN, optical, and cable revenue. Wireless LAN revenue within networks doubled as compared to the year-ago quarter. Wirelessly-enabled laptops is one of the fastest growing opportunities for us and is estimated to be about a $300 million RF market in 2008.

Similar to handset, the RF content is increasing, with new standards that provide greater bandwidth, higher data rates and better quality of service. This transition to 802.11n is well underway and TriQuint is now shipping production volume of our integrated module solution. This MIMO product uses TriQuint technology to fully integrate the LNAs, amplifiers and switches for a dual-band application onto a single gallium arsenide dye. This chip is the core of our module solution.

Three of these front-end modules provide the complete RF front-end for a 3 x 3 MIMO architecture. Executing this product roadmap raises TriQuint's content in laptops from less than $1 to over $4, as we both expand our footprint to include the power amplifier function and benefit from the transition to 802.11n.

Comparing Q1 of 2008 to Q1 of 2007, optical revenue was up 63%, point-to-point radio was up 9%, cable was up 38%, GPS was up 66%, and broadband wireless access, which includes WiMAX products, increased five times, reaching approximately $1.7 million. This growth is driven from the build-out of WiMAX infrastructure, primarily in India.

WiMAX is in the early stages of deployment and will be an important market for TriQuint in the future. While point-to-point radio revenue remains robust, the overall base station infrastructure market is not providing the high unit growth opportunity it has in the past. To offset this impact, TriQuint is expanding our footprint in this market, both organically and through acquisitions. After completing the WJ acquisition, WJ revenue will be included in our network's market reporting. The addition of WJ products to TriQuint's existing products is an important step in our strategy of offering a complete RF solution to the bay station market.

WJ's strength in mixers, gain stage amplifiers and drivers, combined with TriQuint's strength in LNAs, filters, and our investment in RF power, creates an enviable product offering for this market. The combined portfolio touches virtually every RF opportunity on a typical board.

Early customer reaction to our announcement has been encouraging, as customers recognize the value of one supplier providing the complete RF lineup. Additionally, WJ's work to create module solutions for bay stations, initially in TD-SCDMA is strengthened by the combination of the two companies and our intent is to invest in this technology and expand it to other opportunities.

Our strategy for the diverse network's market is simplifying RF. The goal of simplifying RF is to bring high-performance products, ease of customer design, and superior value to our customers. This strategy is driving accelerated growth in networks and will create solid financial performance for TriQuint. Our defense-related revenues were up slightly in Q1 of 2008 as compared to Q1 of 2007, and my expectation is for continued growth. Major drivers this year include Cobra Judy, a ship-based radar system that can be deployed to monitor strategic ballistic missiles, and new F-22 airborne phased array radar production releases.

We are seeing increasing demand in our filter products, bow and saw, for use in classified space programs, and we anticipate shipments for an improvised explosive device jammer program, or IED jammer, beginning in Q2 or Q3 of 2008. It was recently announced that TriQuint had placed the largest gallium nitrite wafer order that our supplier, IQE, had ever received. These wafers support our DARPA research contract and product development efforts, as our GaN technology progresses from research to production. The major near-term drivers for this technology are next generation radar and wideband communications.

In just a moment Steve will provide specific guidance for the second quarter. Prior to that, I would like to overview Q2 and the second half of 2008. Please note that these comments do not include the impact of the pending acquisition of WJ to the results. I remain enthusiastic about growth in Q2 and beyond. Visibility remains clear on the major growth drivers for TriQuint in 2008.

I'm reviewing capital plans and expect to increase our capital expenditures in 2008 to the range of $60 million to $80 million. This investment will increase duplexer filter capacity in Costa Rica, GaAs capacity in Oregon, and begin our 4-inch to 6-inch transition in Texas. I feel TriQuint is well-positioned to grow in each of our markets, and this investment leverages our existing infrastructure and therefore costs much less than building this capacity from scratch. Our expansion plans will create enough capacity to meet our growing demand.

We have maintained our spending during our seasonally down quarter to enable our growth in 2008. This has taken us off our business model of 25% operating expenses as a percent of revenue, but I am confident we can recover our model in subsequent quarters with growth.

With that said, we have terrific opportunities this year and our spending will increase modestly again in Q2 and then flatten in the second half of the year, as revenue continues to grow. Ramping new products is exciting. While we anticipate typical short-term efficiency challenges associated with ramping new products, our mix of products and effective use of total capacity is expected to drive consistent margin improvement for the company each quarter.

Now Steve will provide our results for the first quarter of 2008 and our guidance for Q2. Steve?

Steve Buhaly

Thank you, Ralph. For the first quarter of 2008, we reported revenue of $111.1 million, slightly above the first quarter of 2007 and a decrease of 14% sequentially. Please refer to the supplemental data posted on the investor section of our website for a detailed breakdown of our revenue by market.

For the quarter, our revenue to end markets was as follows: handsets, 50%; networks, 38%; and military, 12%. Our revenue by geographic region was Asia 62%, Americas 25%, Europe 13%. And our revenue for handsets was broken down into the following standards: GSM/GPRS, 34%; CDMA, 39%; wideband CDMA/EDGE and other, 27%; Motorola contributed more than 10% of our revenue in the quarter. There were no other customers with more than 10% of our revenue during the quarter.

Our book-to-bill ratio for the quarter was 1.02 to 1, but does not reflect our anticipated growth in Q2 due to order receipts beyond the end of Q1. Our current backlog is at record levels.

Net income was $4.5 million, or $0.03 per diluted share, for the first quarter of 2008, down from $0.05 per share in Q1 of 2007 and $0.10 per share in the fourth quarter of 2007. Excluding equity compensation expense of $2.4 million, net income was $6.9 million, or $0.05 per diluted share.

Excluding equity compensation of $1.7 million in Q1 of 2007 and $2.3 million in Q4 of 2007, diluted earnings per share was $0.06 and $0.11 for each period respectively. Our gross margin for the first quarter of 2008 was 34.6%, up from 31.1% in the first quarter of 2007 and down from 36.7% in the fourth quarter of 2007.

Capacity utilization in Oregon up 89% and favorable product mix drove the year-on-year improvement. First quarter 2008 gross margin, excluding equity compensation expense, was 35.5%. Operating expenses were $35.8 million for the first quarter of 2008, an increase of approximately $6.3 million from the first quarter of 2007 and $400,000 from the fourth quarter of 2007. Increased engineering expense drove the year-on-year increase. First quarter 2008 operating expenses, excluding equity compensation expense, were $34.4 million, or 30.9% of revenue, well above our long-term business model of 25%.

We recorded net interest income of approximately $2.0 million and net tax expense of $0.5 million in the first quarter of 2008. Cash flow from operations was $22.1 million in the first quarter of 2008, due primarily to solid operating results and an increase in accounts payable. As a result, our cash balance grew by $15.9 million to $219.4 million at the end of the quarter. Capital expenditures of $8.8 million exceeded depreciation and amortization expense of $7.3 million.

During the quarter, net inventory increased $5.9 million to $73.2 million. Inventory turns were 4.0 in the first quarter of 2008, compared to 4.8 in the fourth quarter of 2007 using ending inventory. Inventory turns fell due to lower Q1 sales and increases in raw materials required to meet higher Q2 production levels. Accounts receivable decreased $10.4 million to $62.8 million due to lower Q1 revenue and a decrease in DSO to 52 days. A complete reconciliation of GAAP to non-GAAP results is available in our press release and in the investors section of our website at worldwide web triquint.com.

We expect that Q2 2008 revenue will be $130 million to $135 million. Second quarter earnings are expected to range between $0.05 and $0.07 per diluted share. Excluding estimated equity compensation expense of approximately $2.4 million, we expect earnings to range between $0.07 and $0.09 per diluted share.

Estimates for the second quarter exclude any one-time charges or partial quarter contributions associated with our acquisition of WJ Communications. As of today, we are approximately 88% booked for the second quarter. For the second half of 2008, I anticipate WJ will add between $10 million and $11 million in revenue per quarter and will be neutral to earnings, excluding one-time charges.

Our next conference call, the Q2 2008 earnings release is scheduled for Wednesday, July 23, 2008, at 2:00 p.m. Pacific time. We will continue our virtual visit program, which is a biweekly introductory conference call for investors who are new to the company. Please contact Heidi Flannery, Investor Relations Consultant for TriQuint if you'd like to participate in any of those events.

I will now turn back to Ralph for closing comments prior to welcoming your questions. Ralph?

Ralph Quinsey

Thanks, Steve. Our two largest markets, cellular phones and wireless LAN, are growing in unit demand and expanding in RF content. TriQuint has produced some of the most compelling products available for these markets, products that we believe are the most-integrated, smallest and highest-performing solutions available. These products are now ramping for volume shipments in Q2 that will drive very healthy growth in 2008.

Our strategy of replacing components with highly-integrated RF front-end modules across all of our markets is working, and we will accelerate this strategy in 2008. I'm excited about the addition of the WJ team and look forward to welcoming them to TriQuint. This is a talented organization on which we can bill. The combined portfolio of products for the infrastructure market is unmatched in the industry.

This is a year where TriQuint is realizing improved gross margins and expanded net income. We remain focused on our roadmap to 40% gross margin and 15% operating margin. At the same time, we are stepping up to the new opportunities presented with thoughtful and focused engineering investments. I feel TriQuint is positioned for sustained and profitable growth and each of us at TriQuint is committed to meeting that objective.

We appreciated your interest in TriQuint. I'd now like to open it up for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Edward Snyder with Charter Equity Research.

Edward Snyder - Charter Equity Research

This is Ed. Ralph, a couple things here. First, how would you characterize your CDMA power module business? Are you seeing strength there or are we seeing weakness and how are ASPs?

And then secondly, we've seen a lot of growth here with the Koreans this last quarter, both LG and Samsung, and I know you play big into both of these actually in GSM. Are you seeing particular strength there? Is it localized to the end demand with those players or do you think you've gained share you can hold onto?

And finally -- jump you up here, I know that you've landed a big contract with a laptop OEM, how is the ramp on that look in terms of the next couple of quarters? When do you think you'll get to full production with that socket? Thanks.

Ralph Quinsey

So your first question was the question about CDMA or narrowband CDMA modules or wideband CDMA modules?

Edward Snyder - Charter Equity Research

Well, it's both actually, but I'm particularly interested in narrowband CDMA, given your customer distribution?

Ralph Quinsey

Yes, so narrowband CDMA was fairly flat sequentially. It's a good business for us. We've got the highly-integrated modules that combine duplexer power amplifier module and fairly flat sequentially. As far as Korea, we were very strong in GSM in Korea and had some focused high share in Korea in GSM that we think has mitigated back a little bit. As we get more uniform in our support of our customers, we think that that GSM share has dropped. I think you saw that in our numbers with GSM revenue coming down.

On top of that, we had the seasonality and the inventory adjustment impact, but I feel like we are well positioned in Korea across the board to be strong going forward, but there is some share shifting that we are experiencing. And then your last question on our laptop business, the easiest way to say that is the growth is going to be robust. I'm not specifically guiding on unique products and that's incorporated in our guidance. The two drivers for our guidance in Q2 are our wireless LAN opportunity and our new 3G modules for wideband CDMA.

Edward Snyder - Charter Equity Research

And then one final one, if I could. Accumulating cash, you guys are generating cash and it looks like, given your profits, you're going to do more of that, can you order for me the priorities or uses of those cash? You did an acquisition, M&A acquisitions like WJ, buying back converts, stock dividend, what's your thinking on this? And is there a target level that you feel very comfortable with above which you may start doing some of these different initiatives?

Steve Buhaly

Hey, Ed, this is Steve. I'll take that question. We finished about $220 million, about $90 million of that is offshore cash, which has limited applications, i.e., we don't want to bring that back into the US or we'll pay a pretty hefty tax on it. So with respect to the remainder, we expect to maybe net $65 million or so out the door for the upcoming acquisition. Ralph mentioned substantial increases in our CapEx. I think that's going to take us down to a level where we're comfortable and we have a prudent amount of cash, but not much excess.

Edward Snyder - Charter Equity Research

Thanks a lot.

Operator

Your next question comes from the line of Jeff Kvaal with Lehman Brothers.

Jeff Kvaal - Lehman Brothers

Hi, thanks very much.

Ralph Quinsey

Hi, Jeff.

Jeff Kvaal - Lehman Brothers

I have a couple of questions for you guys. One, I was hoping that you would comment on your 2008 outlook, if that would be possible?

Ralph Quinsey

Unfortunately, Jeff, we do not update or reaffirm our annual guidance post originally providing it. As you know, at that time we provided guidance to a range of $540 million to $580 million, not updating that, reaffirming that. We have I think a very robust growth guidance for Q2, up about 20% sequentially, and I think we're well booked for that. We're very much in the normal range at 88% at this time in the quarter for that, so I feel good about 2008 and growth in 2008.

Jeff Kvaal - Lehman Brothers

Okay. All right. Thank you. That's helpful. Then secondly, I think last time we chatted, it sounded like there was a lot of cheap CapEx or cheap capacity that you could add without really getting too, too deep into CapEx spending. Seems as though the picture has changed a little bit, and it'd be super if you could help us look through that a little bit?

Ralph Quinsey

No, it's still pretty much the same. We are largely installing equipment to mitigate bottlenecks in our Oregon fab, and we are somewhat expanding our duplexer capability, because we think duplexers are very important in our Costa Rica factory. And then I have initiated an investment to start the 4-inch to 6-inch conversion in Texas.

That's a relatively small investment to get a one-of line set up, a line that can run one of our technologies in the Texas facility and at least one piece of equipment. That investment is probably in the range of under $5 million or $6 million, so it's a fairly well ordered investment plan. But we are seeing great demand and we want to get ahead of the curve.

Steve Buhaly

Jeff, I can give you a little bit more color. If you look back over the last couple of years we've averaged about $35 million in CapEx per year and all of that really fits in the sustained category. There wasn't much capacity increases during that period, as we were building to fill the existing capacity. So if you say of the $60 million to $80 million, roughly $35 million is normal ongoing upgrades and replacements of existing capacity, the balance of that really reflects the capacity increases that we're putting in place to support these higher levels of business we expect.

Jeff Kvaal - Lehman Brothers

Okay. Fantastic, that's helpful. Then I guess my last question then would be about efficiency. Ralph, you mentioned efficiency was going to be on your mind in the second quarter. Is that related to the -- is it still an end ramp or where should we think of that?

Ralph Quinsey

I'm not sure I understand your question as far as efficiency and financial efficiency leverage fall through?

Jeff Kvaal - Lehman Brothers

No, in the fab itself, yes.

Ralph Quinsey

So the efficiency, as we said, was running about 89%, 90% utilization in the factory.

Steve Buhaly

Ask your question again, Jeff. We missed it.

Jeff Kvaal - Lehman Brothers

I thought I heard you, Ralph, mention something about how efficiency was going to be a focus for you folks in the second quarter, particularly around new product introductions?

Steve Buhaly

The ramp. Yes, there will be -- the gross margin will not -- the growth in gross margin won't be as great as the revenue growth, partly because the sharp ramp we're going to be experiencing with these two products we've been talking about is always relatively inefficient. You're always going through a learning process as you increase your volumes at the pace we will be doing so. And so that's kind of a Q2 phenomenon and I think we'll work our way through it, but there's a little bit of a drag that we expect from that.

Ralph Quinsey

Yes, I would take that as a cautionary statement. We anticipate launching these products at a high yield with great performance, but in the interest of true transparency it's a significant ramp. So as a cautionary statement, yields may dip below the 85% range. That would be a bad thing for us. We typically like to run our product yields 90%, in the high 90s once we're mature.

Jeff Kvaal - Lehman Brothers

Okay. So the products then -- it's not as if these products are necessarily going to be significantly lower gross margin, it's just that you've got a yield ramp that should alleviate in the third quarter?

Ralph Quinsey

No, I think that's exactly it. It's just a cautionary statement, and I fully anticipate this to be a very successful ramp and with good products and good contribution.

Jeff Kvaal - Lehman Brothers

Thank you.

Operator

Your next question comes from Aalok Shah with D.A. Davidson.

Aalok Shah - D.A. Davidson

Hi, Ralph and Steve. Just a couple quick questions if I could follow up on some stuff Jeff just mentioned. On the capacity utilization front, if I'm thinking about that now, you're at 89% in Hillsboro, what is your target and as you add that capacity in say Q2, Q3, are we going to see utilization rates drop and therefore that's why you might be a little bit cautious on the margin front right now?

Ralph Quinsey

Yes, so our target is 85% to 95%, that's the window we like to operate one. We have been talking for a couple of quarters on our ability to take capacity up about 20%, 25% here in Oregon with a relatively modest investment. That's what we're executing right now, so we can expand that much and I believe that we'll do our best to keep the capacity expansion in tune with the demand.

There's a chance we can get ahead of ourselves one way or the other a little bit, and there will be some impact. I'm not anticipating a significant downturn in margin-based utilization going low. I think that you should anticipate improved margin performance each quarter sequentially.

Aalok Shah - D.A. Davidson

And if I'm looking at a target range for margins, is there a target that you're thinking of on a revenue base?

Steve Buhaly

I think for Q2 it's fair to say that we are shooting for 35% or maybe a few basis points better than that, and our longer-term goal remains 40%. That's a non-GAAP number. There's about 80 basis points between GAAP and non-GAAP in gross margin. But we're hopeful we'll be able to get there by the end of this calendar year.

Aalok Shah - D.A. Davidson

So, Steve, on the 40% number, what kind of revenue level would you need?

Steve Buhaly

We've said in the past somewhere around $165 million a quarter is a rough estimate of what it would take for us to operate at that level.

Aalok Shah - D.A. Davidson

Okay. And if I'm looking at the last question, again, on yields, were the any specific yield issues in Q1 and what were yields like in Q1?

Ralph Quinsey

Well, we have some variation in yield every quarter. We had nothing that impacted our finances significant. We had one issue in our Oregon fab that was out of the ordinary slightly, but to tell you the truth, the factory recovered and really didn't have a big impact on the performance.

Aalok Shah - D.A. Davidson

Okay. And then last question for me, just in terms of this last quarter Q1, your margins were pretty solid given the revenue drop, was that mostly due to mix in revenue more than anything else?

Ralph Quinsey

You hit the nail on the head. We had good factory performance and as you're familiar with, our handset business was relatively soft in the first quarter, and that created a more favorable product mix relative to gross margins.

Aalok Shah - D.A. Davidson

Okay, great. Thank you very much, guys.

Operator

Your next question comes from Amit Kapur with Piper Jaffray.

Amit Kapur - Piper Jaffray

Great, thanks a lot, guys. Just a quick question. As you look at the revenue step up from Q1 to Q2, how should we think of the product mix, the proportion of your handset versus non-handset product mix. Is it fair to assume that the Wi-Fi related shipments are the primary growth driver or are there other factors at play?

Ralph Quinsey

No, I think 3G and Wi-Fi will both be drivers. I think you'll a see fairly balanced mix in our model where about half our business is handsets. Depending upon how it phases in, we're going to swing in some percentage points one way or the other, but it's still our plan to keep that mix in the window of low 50s to 58% in the long run. I think you're going to see the mix within handsets swing more to wideband CDMA and could be in excess of 40% of our mix by the end of the year.

Steve Buhaly

The third factor is the return or the elimination of the Q1 seasonality in the handset business, that'll help a little. And probably for the back third of the quarter, we will have the WJ acquisition on board, if the plans go as they look. So for the balance of the year, we still think we're in the 50/50 kind of mix between handset and non-handset business.

Amit Kapur - Piper Jaffray

Great, fair enough. What are you seeing in terms of trends in the infrastructure, some of the infrastructure end markets and how do you see that playing out in 2008?

Ralph Quinsey

The infrastructure market doesn't have the high unit growth it used to have and we've characterized it as flat and consolidating somewhat. One of the high points within that market continues to be point-to-point radio often used as backhaul for that market, and certainly you know our plans are to grow in that marketplace by expanding our footprint, investing in new technologies, high-voltage HPT, and our acquisition strategy, WJ Communications augments our ability to service that market and gives us just a really great position with our customers to supply the complete solution and an opportunity now to leverage the good work that WJ has done on creating really highly-integrated, good module solutions for both the transmit side and the receive side on the transceiver card.

Amit Kapur - Piper Jaffray

Great, thanks. Maybe one final question on WJ, Ralph. I think you mentioned that you're expecting cash synergies of $8 million, ramping in 2009, and is any of that new stuff that you found since you announced the deal or is it too early to tell if there's new stuff on the horizon?

Steve Buhaly

I'll take that. No, the numbers are pretty consistent with the diligence we did prior to coming to agreement to acquire WJ. I'd say we're pretty much right on track with the assumptions we used at the time.

Amit Kapur - Piper Jaffray

Great. Thanks, guys.

Operator

Your next question comes from Steve Ferranti with Stephens Incorporated.

Steve Ferranti - Stephens Incorporated

Hey, guys, good afternoon.

Ralph Quinsey

Hi, Steve.

Steve Ferranti - Stephens Incorporated

Ralph, you had referenced what sounded like a specific win in 3G that would be ramping in the second half, I wonder if you could provide a little more color on that in terms of is it a reference design based win? Is it a platform win? Existing or new customer? Any color you can put around that?

Ralph Quinsey

We've actually had several opportunities and wins, I would characterize wins. We have several new customers for those products, for our tridion modules, and includes both new and existing customers. So, Steve, I apologize, I don't guide specifically what platforms, unannounced phones, unannounced opportunities, but in general good interest and uptick for those tridion modules across multiple customers, both existing and new customers.

Steve Ferranti - Stephens Incorporated

And am I correct in assuming that these products will incorporate multiple WCDMA bands into a single module?

Ralph Quinsey

No, the architecture of the complete solution. Not all customers are buying the complete solution, but the architecture of the complete solution is an elegant four-chip module -- four-module chipset, one for the EDGE and the switching, a classic transmit module, but includes a very linear switch for the linear band, and then a transmit module that has a PA-Duplexer and other electronics for band 1, band 2, and band 5, and so four-module solution.

Steve Ferranti - Stephens Incorporated

I see. And are you starting to see preproduction orders start to ramp on these?

Ralph Quinsey

Yes, we have orders.

Steve Ferranti - Stephens Incorporated

Great. It struck me, it seemed like your utilization rates were actually up quarter over quarter despite the handset revenues being a little soft. Am I looking at that right and what's driving that, if I am?

Ralph Quinsey

No, we had continued to run fairly strong through the quarter in anticipation of Q2 and then we had some strength in some of our non-handset businesses.

Steve Ferranti - Stephens Incorporated

Okay. Very good. And in terms of WJ, do you guys have a timeframe in mind over what period you expect to recognize the $8 million in synergies that you had discussed post closing?

Steve Buhaly

I'll take that. We expect all those synergies to be in 2009. The balance of 2008 is a mixed bag; some integration costs, some folks who are staying through part of the year but not all of the year, and some savings. And so a gross estimate of the net of all of that is it's a big wash. I think there may be a little upside there, but being a little cautious I'm going to call it a wash for the balance of the year. But by January 1st of '09, we'll have the transition complete and we believe we will have $8 million in cash synergies, mostly G&A, but not all.

Steve Ferranti - Stephens Incorporated

Great. And you said that you had expected that transaction to be essentially neutrally accretive in '08? Do you expect it to be additive to gross margins once that deal closes?

Steve Buhaly

A little bit, but remember, it's relatively small compared to the size of TriQuint, so it's going to have a very modest, but positive impact on gross margins.

Steve Ferranti - Stephens Incorporated

Okay. And last one for me. Ralph, you had mentioned earlier some share shifts in the GSM space. Are there opportunities you see out there to gain back that share, either in terms of new customers or new products or new slots you see coming available as we progress throughout the year?

Ralph Quinsey

Absolutely, and in the aggregate we continue to gain share. I estimate that we're probably -- of the handset business, RF solutions, in the range of 12%, 12.5% share now, so that's up a couple of points from a year ago, and a steady increase. But we will continue to gain share across the market, and I think our fair share of the market is north of 25% share.

Steve Ferranti - Stephens Incorporated

Okay. And just as a follow-up. Samsung didn't show up as a 10% customer, was it a case of them just being slightly below 10 or --?

Ralph Quinsey

All I will say is that they were below -- I'm sorry, all I'll say is they were below 10%, but as we discussed on the last call, there was an inventory adjustment that went on at that customer and it clearly reduced revenues in the quarter.

Steve Ferranti - Stephens Incorporated

Understand. Very good. Thanks, guys.

Operator

Your next question comes from the line of Pierce Maccagno with Needham & Company.

Pierre Maccagno - Needham & Company

Congratulations on the quarter, Steve and Ralph.

Ralph Quinsey

Thanks, Pierre.

Pierre Maccagno - Needham & Company

So do you expect Samsung to become higher than a 10% customer next quarter?

Ralph Quinsey

No, I don't specifically guide customers next quarter, but I certainly expect Samsung to be a big customer in the future, Samsung is an important customer, and I think we have great opportunities with Samsung.

Pierre Maccagno - Needham & Company

And what other customers, handset customers are you targeting? At this point you don't have much exposure to Nokia or Erickson or then can you talk about LG?

Ralph Quinsey

Well, we're targeting all the handset customers. We're basically, as I said, in the range of 12.5%. We have traditionally been strong with Motorola, as you know, and we have traditionally been strong with Samsung. I think we have opportunities at LG, I think we have opportunities at Sony Erickson, and I think we have opportunities at Nokia. I think it would be inappropriate for me to guide for those opportunities at any specific time, but TriQuint has great technology.

We have great solutions. People look at our 3G solutions and they can't believe the current ring. They can't believe how small the modules are. They can't believe that we supply the whole solution for the value that we supply it, and so we're going to get interest for those products. We'll just take them as they come, and be patient and continue to grow our share.

Pierre Maccagno - Needham & Company

So you think most of the growth with these customers would be in 3G?

Ralph Quinsey

Yes, I think 3G is the fastest growing part of the market, but we are also working on our next generation GSM product. We haven't announced it yet, so I'm holding back a little bit, but we have done some really slick things to take cost out of our next generation GSM module. As you know, we've been a leader with our 6 x 6 out there, the most integrated complete transmit module out there, and we're doing neat things with things like copper bump flip-chip and integration of multiple chips into single dye. The team has really responded well in designing costs out of the module, so we will be launching that module later this year.

Pierre Maccagno - Needham & Company

And then going on to wireless LAN, are you looking at the handset business? Is that something that is coming any time soon?

Ralph Quinsey

Absolutely. That's part of our target market, and if you look at our data that we put out on the web that breaks down in submarkets, you can see that wireless LAN and handsets went up significantly and now represents 5% of our handset revenue for Q1.

Pierre Maccagno - Needham & Company

Great. Thanks.

Ralph Quinsey

Yes.

Operator

(Operator Instructions) Your next question is from Scott Jones with JPMorgan.

Scott Jones - JPMorgan

Good afternoon, guys. So last quarter there was a lot of commentary on the inventory issues at two of your main customers and wanted to get an idea if you feel that those issues are now solidly behind you and how do you feel about the inventory situation now out at your customers?

Steve Buhaly

Well, again, the impact of the inventory discussion last quarter was a discussion around what would happen to Q1 revenue. We're guiding revenue in Q2 up approximately 20%, so I would say that we are well positioned from an inventory perspective and we're going to grow now.

Scott Jones - JPMorgan

Okay. So a lot of the mixed results -- or we've seen a lot of mixed results from handset makers out there, what is your view of the end market as far as the growth for this year?

Ralph Quinsey

I'm fairly bullish on the market in handsets and even more bullish about the RF demand. First of all, from a unit perspective I think a general and widely-accepted number is in the 10% range of unit increases. When you look at the mix change with increasing wideband CDMA, I estimate the wideband CDMA portion of the market is going to grow somewhere between 40%, 45% this year. There's increased content.

There's maybe $1 content in the GSM phone. There's anywhere from $3 to $6 content in a 3G phone, so that mix change is going to be beneficial. So I think the RF growth demand is fairly healthy. There's also going to be ASP reductions, right? The functional ASP continues to go down in this marketplace. I think the market is a little stabler than it has been sometimes in the past, but net-net if you wash out the reductions with the unit growth, you still have this opportunity with increasing content that'll make it a good market, for us, for our competitors, call that 10% growth. That's a good healthy market in the size of the market that we have available to us.

Scott Jones - JPMorgan

Okay, thanks. One other question I had on the notebook platform opportunities, what do you feel that TriQuint can do to get more share in that socket versus the competition that's out there, the differentiation or to get a greater share of that dollar content on the 802.11n platforms?

Ralph Quinsey

High-quality products and great responsiveness. We work hard to increase our share every day. We think that we have a good position with that product, and we're shipping lots of units, and we're going to continue to work hard to be a dominant supplier for that marketplace.

Scott Jones - JPMorgan

Is there any way to quantify out of that $300 million opportunity what share of that you guys feel that you'll be able to get, especially in the second quarter and moving onto the seconds half of the year?

Ralph Quinsey

Well, that's a total market opportunity. The real impact for TriQuint you should focus on is that we're moving from supplying components, in some cases dye, maybe at a less than $1 content to supplying modules, so we've taken the integration in-house and it takes our content up to $4 or more per unit solution. That's the real transition for TriQuint. So we've really taken the value in-house and we're benefiting from that transition to MIMO. That's what's enabling us being a module integrator and the 802.11n growth.

Scott Jones - JPMorgan

Okay, thanks, gentlemen.

Ralph Quinsey

Thank you.

Operator

Your next question comes from the line of David Kelly with Boston State Street.

David Kelly - Boston State Street

Hi, good afternoon, gentlemen. Thank you for taking my call.

Ralph Quinsey

Hi, David.

David Kelly - Boston State Street

How are you today? Nice quarter. Just want to ask you one question. We reported $111 million this quarter and you're reporting up $130 million to $135 million next Q. Your 10% customer, Motorola, I think the whole industry knows they're down 20% to 25%, so where do you expect to make up that revenue?

Ralph Quinsey

New customers, new products, David. It's an exciting marketplace and we're getting good up take for our solutions. We've already got just under 90% of the midpoint of that guidance booked on backlog, and so I'm fairly confident that we have the demand to satisfy that ramp.

David Kelly - Boston State Street

Okay. We've also heard there are rumors out there that you may be involved with the next Apple 3G phone. Can you talk about that?

Ralph Quinsey

We just don't comment on unreleased phones or our customers business. We just don't comment on that, David, sorry.

David Kelly - Boston State Street

Okay, that's very understandable. Good quarter. Good guidance. Great job. Thank you.

Ralph Quinsey

Thanks, David.

David Kelly - Boston State Street

Bye, bye.

Operator

Your next question comes from the line of Alex Woodward with Mazama Capital.

Alex Woodward - Mazama Capital

Good afternoon.

Ralph Quinsey

Hi, Alex.

Alex Woodward - Mazama Capital

You had one 10% customer this quarter. How many 10% customers do you think you could have in the second half of the year in Q3 and Q4, different 10% customers?

Ralph Quinsey

Boy, we don't guide that, but we're going to have -- I think we'll have more than one. Steve, do you want to take a shot at--?

Steve Buhaly

Well, it'll be less than 10.

Ralph Quinsey

Yes. More than one. I'm not sure, Alex.

Alex Woodward - Mazama Capital

Would it be unrealistic to think that there could be four or five?

Steve Buhaly

I think that would be towards the top of the roster, so somewhere in between that, I think. Between one and that would be a good guess.

Alex Woodward - Mazama Capital

And you had a book-to-bill of 1.02?

Steve Buhaly

Correct.

Alex Woodward - Mazama Capital

And you're 88% book to mid point of your guidance. Have you seen a tremendous pick up in bookings in the first part of April?

Steve Buhaly

We've had some pretty good bookings this quarter, so the 1.02 is obviously not representative of what we think we can do in the quarter.

Alex Woodward - Mazama Capital

And the last isn't really a question, it's more of a qualitative comment because you've done a really good job on your gross margin. I know I've given you a hard time on that in the past, but revenue's flat and you improved it by 350 basis points year over year, so you're doing a good job of executing. Congratulations.

Ralph Quinsey

Thanks, Alex.

Operator

There are no further questions at this time. Do you have any closing remarks, sir?

Ralph Quinsey

Yes, I do. I want to thank all the conference call participants for their interest and their questions. It is a fun time to be working at TriQuint Semiconductor. Our teams have created the right products at the right time to drive healthy revenue growth, and with growth I expect continuous improvement towards our financial goals. I look forward to updating you on our progress during the Q2 earnings call on July 23rd. Thanks, again.

Operator

This concludes today's TriQuint Semiconductor first quarter results. You may now disconnect.

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