Dialog Semiconductor PLC (OTCPK:DLGNF) Full Year 2017 Earnings Conference Call February 28, 2018 4:30 AM ET
Executives
Jose Cano – Head of Investor Relations
Jalal Bagherli – Chief Executive Officer
Wissam Jabre – Chief Financial Officer, Senior Vice President Finance
Analysts
Mitch Steve – RBC Capital Markets
Andrew Gardiner – Barclays
Quang Tung Le – Credit Suisse
Veysel Taze – ODDO
Robert Sanders – Deutsche Bank
Robin Brass – H&A
David O’Connor – Exane
Guenther Hollfelder – Baader-Helvea
Robert Sanders – Deutsche Bank
Jose Cano
Good morning and thanks to everyone for joining us today. Our call is being hosted by Dr. Jalal Bagherli, Dailog CEO; and Wissam Jabre, our CFO. In a moment, I will hand you over to Jalal to talk through the company’s Q4 and full-year performance.
First of all, I must remind everyone that today’s briefing and some of the answers to your questions may contain forward-looking statements. These statements reflect management’s current views and there are risks associated with them. You can find a full explanation of these risks on Page 2 of the investor presentation in the Investor Relations section of the Dialog website. The interim report and press release can also be found on our website.
I would now like to introduce Jalal who will run through the main highlights from the fourth quarter and the year as a whole. Jalal, over to you please.
Jalal Bagherli
Thank you, Jose. Good morning, everyone. Let me start with the look at the key highlights from the year. In 2017, demand at the high end of the mobility segment improved, and across all our segments, we shipped 14% more chips than in 2016. In total, that amounts to almost 1.7 billion units of products shipped. Investing in R&D is vital to drive long-term revenue growth, and in 2017, we invested in our people and our products while maintaining rock-solid financial execution. This year, we have delivered double-digit revenue growth maintained or increased underlying profitability across our business segments and returned close to $175 million of cash to our shareholders.
Wissam will take you through our financial results in more detail shortly, but first on Slide 4, let me briefly highlight a few areas of our financial performance this quarter. During the fourth quarter, business momentum remains strong and we delivered revenue of $464 million. This performance was slightly ahead of guidance and is the highest quarterly revenue for the company on record, 77% above Q4 of 2016.
The year-on-year revenue growth was driven by the high volume ramp of new Power Management ICs resulting in 55% sequential revenue growth in Mobile Systems and the first-time consolidation of Silego Technology into the Group. Underlying gross margin and operating margin were in line with our performance during Q4 of 2016. Underlying diluted EPS increased 72% year-on-year, to $1.34, that is 3 times more than revenue growth. Cash flow from operating activities was up 46% to $130 million, whereas we continue to invest in R&D to generate future revenue growth opportunities.
Let’s move to Slide 6 and take a look at the outlook. Based on our current visibility and typical seasonal trends, we anticipate revenue for Q1 2018 to be in the range of $330 million to $360 million. Good business momentum and a pipeline of key product launches give us confidence 2018 will be a year of good revenue growth. As in previous years, revenue performance will be strongly weighted towards the second half of the year. In line with the expected revenue performance, we expect gross margin for Q1 2018 to be broadly in line with the prior quarter and financial year 2018 to be broadly in line with the financial year 2017.
So with that outlook covered, let’s now turn to Slide 8 to touch on some of the key points of our business. Technical excellence is at the core of our business and routed on a focused R&D approach. To ensure, we continue to develop new products organically. In 2017, we expanded our design centers in Europe, Asia, and North America. There are now over 2,000 colleagues including in Silego in Dialog, 75% of whom work in engineering-related functions. Our talent pool is now based in 73 locations spread across 16 countries.
These investments have enabled us to do 2 things. First, as you can see in the chart, we have been able to increase the value of more sophisticated power management solutions over the medium term. The chart at the bottom of the page reflects the average content per device from our custom PMICs and includes all the platforms we currently serve. Second, the investment in talent across our business and their business to maintain our technology leadership within mobility and IoT.
Focusing on mobility first, we pioneered the programmable Power Management IC and our knowhow on integration and power efficiency allows us to deliver best-in-class, highly-integrated ICs in short-design cycles. We’ve also maintained a commanding market share in the smartphone rapid charge market of approximately 60%. Although adoption of RapidCharge technologies through second half of 2017 did not maintain the pace of previous years, we continue to make good progress introducing our first USBPD interface IC and pioneering the use of gallium nitride for mobility.
In the IoT space, the complexity of power management in connected devices like wearables and smartwatches is gradually gathering pace, as devices become more complex and record better power management. With Bluetooth low energy, we have built an entire product range of innovative SoCs, which enabled our customers a faster go-to-market substantial energy savings and a smaller form factor. As a result in 2017, we’ve maintained 16% market share in BLE according to IHS October market data and our own estimates.
Turning to Slide 9. Just look at the progress made on 1 of our key strategic objectives, expansion of our product portfolio. Our R&D programs have contributed to the expansion of our product portfolio. In Mobile Systems, we expanded our catalog of power management ASSP products, with new charger IC and introduction of our first nanopower solution. We successfully extended our reference platform program leveraging our technology into the automotive segment; thanks to our collaboration with Renesas and Xilinx.
Our connectivity segment introduced the BLE solution supported the new 5.2 standard and is successfully engaged with a number of OEMs with SmartBeat, our audio DSP product targeting the high-end segment of consumer headsets. In Power Conversion, now part of the newly created Advanced Mixed Signal segment, we introduced a USBPD IC and a complete high-power device and GaN based solutions, which are available in the market in 2018 targeting the notebook market.
The strategic investment and acquisitions we’ve made in 2017 have helped us to expand our market opportunity. Through the acquisition of Silego and the LED backlighting business from ams, we have expanded the breadth of our Advanced Mixed Signal technologies contributing to the ongoing expansion of our customer base. And the strategic investment in Energous is gathering momentum following the FCC approval of the WattUp Mid Field transmitter. The investments helped us to address the significant opportunity in the wireless charging market and we have a full product road map ready to deliver.
Let’s now take a closer look at 2018 growth drivers on Slide 10. We remain positive about our prospects for 2018. We expect it to be another good year of revenue growth. This confidence is based on our solid presence in our markets and a strong pipeline of new products. Let me summarize the main items. Mobile Systems revenue will benefit from the annualized impact of the content growth achieved in 2017; the first signs of revenue from various initiatives such as our collaboration with Renesas and Xilinx and the expansion of our ASSP product portfolio.
The BLE market will continue to grow. We expect to deliver another year of strong revenue growth, driven by the expansion of Bluetooth low energy portfolio and an ever increasing number of connected devices driving demand. Growth in our Connectivity segment will also see best revenue from our Audio DSP products in the second half of the year. Wireless audio adoption is steadily increasing, particularly across consumer headsets, and the market is expected to grow over the medium term.
We expect RapidCharge technologies like USBPD to gather momentum in the second half of 2018. The AC/DC market continues to grow and the introduction of new technologies provides us with new opportunities. The same can be said for LED market where our broader LED backlighting portfolio will help us capitalize on our strong position.
Finally a word on Silego. This year our primary focus is to maintain business momentum with existing customers and introduce the benefits of the CMIC technology to Asian customers. We expect revenue from Silego to grow 15% year-on-year in 2018.
Before I hand over to Wissam, let me summarize the key takeaways on the next slide. We are well positioned to benefit from structural trends for more efficient power management and power efficient technologies, primarily addressing mobility and IoT. We have a differentiated product portfolio built through a combination of internal development programs, strategic investments and acquisitions. Dialog has a number of technologies with leading-market positions and we continue to develop highly-integrated products, which enable our customers a faster go-to-market. Our expanding product portfolio contributes to the growth of our pipeline of opportunities. Based on this, we remain confident in our growth prospects for 2018.
Before I hand over to Wissam, I’d like to update you on what is happening with the 2019 design cycle of our custom PMICs. Prices on negotiation on the 2019 primary mobile PMICs have not finalized yet. However, we are making progress to complete the design and we are planning to sample in the second half of 2018.
Additionally, since mid Q4, we’ve been awarded a number of new custom PMIC designs targeting 2019 and later production ramps. With that Wissam, can I hand over to you, please?
Wissam Jabre
Thanks, Jalal, and good morning, everyone. First, let’s take a closer look at revenue performance on Slide 13. Q4 2017 revenue of $464 million was up 27% year-on-year, and slightly above the high end of our November guidance. The year-on-year increase was mainly driven by growth in Mobile Systems and the first-time consolidation of Silego into the group.
Mobile Systems during Q4 was up 31% on higher sales volumes and increased content per device. And Silego contributed $11 million of revenue in the quarter. In Q4 2017, we created the Advanced Mixed Signal segment grouping the former Power Conversion segment and Silego. For the full year, we delivered 13% year-on-year revenue growth and the business outside of Mobile Systems also grew by 13% year-on-year. As you can see in the pie chart at the bottom of the slide, Advanced Mixed Signal, Connectivity and Automotive and Industrial, all delivered double-digit revenue growth in 2017.
Excluding the contribution from Silego, year-on-year revenue growth for the group was 12%. Turning to Slide 14, to cover gross margin. In Q4 2017, underlying gross margin of 46.1% in line with Q4 2016. This is mainly the result of the higher leverage from increased revenue offset by product mix. This led to an underlying gross margin of 46.7% for the full year, an increase of 40 basis points year-on-year, broadly in line with our guidance. This increase was mainly due to higher revenue and manufacturing cost reduction.
Let’s now turn to Slide 15 to cover operating expenses. Q4 2017 underlying operating expenses were $105.9 million, up 27% from Q4 2016. This includes the impact from the first- time consolidation of Silego into the Group. As a percentage of revenue, underlying operating expenses were down 10 basis points year-on-year. Underlying R&D expenses in Q4 2017 were up 28% year-on-year. This increase was the result of the consolidation of Silego into the group, alongside the ongoing investment in application-specific customer opportunities supporting the growth and diversification of the business.
As a percentage of revenue, underlying R& D expenses were broadly in line with Q4 2016, at 16.4%. Underlying SG&A expenses increased by 25% over Q4 2016. This increase was mainly due to the consolidation of Silego and the timing and increase of the performance- based bonus driven by the strong financial performance of the business in 2017. As a percentage of revenue, SG&A was down 20 basis points year-on-year at 7.4%. For the full year, we reduced operating expenses as a percentage of revenue by 30 basis points.
This was achieved while maintaining investment in R&D at approximately 19% of revenue, broadly similar to 2016. In 2018, we will continue to carefully manage SG&A costs and invest in R&D projects to enhance our technical leadership and extend our technology portfolio. Let’s move on to Slide 16 to take a look at the operating profit and earnings per share. In Q4 2017, underlying operating profit was 28% higher than Q4 2016.
This was mostly due to the higher revenue in the quarter. For fiscal year 2017, underlying operating profit was up 17% year-on- year to $259.5 million, four percentage points higher than revenue growth. Two of our operating segments maintained a similar level of underlying operating margin in 2017; Mobile Systems at approximately 26% and Advanced Mixed Signal at 4.5%.
The star performer in 2017 was Connectivity, which improved underlying operating margin significantly from 4.7% in 2016 to 10.5% in 2017. The underlying effective tax rate in 2017 was 14.5%, almost 10 percentage points below 2016. This decrease was mainly due to a credit of $9.6 million arising from tax on currency translation differences between functional and tax currencies, and a $9.7 million credit due to the utilization of unrecognized deferred tax assets. Excluding these two credits, our underlying effective tax rate would have been approximately 22%. As a result of the higher revenue growth, increased operating profit and lower effective tax rate, underlying diluted EPS for the quarter was up 72% to $1.34.
For fiscal year 2017, underlying diluted EPS was up 41% to $2.92, three times more than revenue growth. From earnings let’s now turn to Slide 17 to take a closer look at the inventory and cash. As we indicated in November, the value of inventory decreased in Q4 2017 and days of inventory declined to 60 days. At the end of Q1 2018, we expect inventory levels to be flat or slightly below Q4 2017 and days of inventory to increase from Q4 2017. At the end of Q4 2017, cash and cash equivalents balance was $479 million. The decrease from the previous quarter and year-on-year was mostly due to the $268 million net outflow related to the acquisition of Silego Technology and the LED backlighting business. For the year 2017, free cash flow was $205 million, up 5% from 2016.
In summary, I am pleased with the financial performance of the business in Q4 2017 and the full year. We have grown revenue through a combination of organic R&D programs and strategic investments, while increasing underlying profitability. We remain a cash generative business, our financial position continues to strengthen and I’m confident about our prospects as we move into 2018. With that, I can wrap up the presentation and I will now ask the operator to open the call to questions. Operator, over to you please.
Question-and-Answer Session
Operator
Thank you very much. [Operator Instructions] Our first question comes from the line of Mitch Steve from RBC Capital Markets. Mitch please go ahead your line is now unmuted.
Mitch Steve
Hey guys, thanks for taking my question. Just in terms of the full-year guidance, is there any sort of additional seasonality which we aware of given that you have Silego or is just a standard Mobile Systems back half weighted story?
Jalal Bagherli
Hi, Mitch. It is a typical seasonality that we would see every year, which means it’s more of the back half weighted revenue profile.
Mitch Steve
This way it’s going to change the seasonality that eventually?
Jalal Bagherli
It does not change the seasonality much now.
Mitch Steve
And the second one is on the EPS line, given that Silego is essentially integrated according to plan, do you guys have a long term kind of gross margin and operating margin target for that to layout?
Wissam Jabre
With respect to the long term what we had said at the time when we announced the transaction would still be valid today, which means that the Silego business is expected to grow for – at the around the 15% rate and the gross margin for that business is higher than our average corporate gross margin, it’s more in the 50% plus range. And then in terms of the operating margin, the expectation is, for this year, it will be slightly lower than the corporate average, as the size of the business is as much smaller, but then from next year onward, I would expect it to be very close to our corporate average and continue to grow.
Mitch Steve
And just one – last small one, for the guidance at above expectations, is that largely due to Mobile Systems as well?
Jalal Bagherli
I think it’s – we can’t hear you very well, but I think you’re asking about the guidance and what contributes towards that? I think the – primarily most of our business is driven by Mobile, so Mobile is the main driver. But all other businesses are also looking pretty good for in terms of growth in 2018 including Q1. So there isn’t one that because sort of highlight to say is not necessarily growing so much. But I think – but Mobile Systems is the main driver of the numbers absolutely.
Mitch Steve
Okay perfect. Thank you.
Operator
Our next question comes from the line of Andrew Gardiner from Barclays. Andrew please go ahead. Your line is now unmuted
Andrew Gardiner
Good day gentlemen. Thank for taking the question. I just was interested in sort of picking up from where we left off with the December call in terms of sort of state of play with Apple and sort of where you stand there in 2019. I take it from the comments that you made in the press release and on the call this morning that the engagement is there particular across a sort of fairly broad range of products and broad range of applications from you, but just in terms of the key element of the sort of the system PMIC, can you give us an update is to where things stand? Thank you.
Jalal Bagherli
So I think – again I’ve got constrained by our confidentiality et cetera. I will comment today from again and I think what I was saying in December when we discussed this – I got two updates since then. One is, we’ve had a number of new designs awarded to us since mid Q4 and into Q1 and these range includes smaller PMICs as well as main PMICs for a number of applications. And by the number of application, I mean across phones, tablets, wearables, computing sort of devices and typically the timing is such that anything awarded now will hedge earliest 2019 but also 2017 and beyond products. So the relationship has we laid out back in December remains very strong, highly collaborative and we continue that range across a number of products. Specifically, I know that your main interest is on the system PMICs or core PMIC for the smartphone application. We said that we would be in negotiation for 2019. We remained so, we’ve made progress in that. We are now past developing IP and evaluation of IP and we are well into completing or at least a good ways through completing design of the chip for the 2019 application. We intend to sample those chips in the second half of this year and this is again done on a collaborative ways, not done in isolation. But the commercial negotiation continues and is not finalized. So that’s the update I have in terms of those elements.
Andrew Gardiner
Okay. Thank you, very much. Also just perhaps a quick one for Wissam. On the tax rate going forward, how should we think of 2018, 2019, 2020 compared to the sort of the underlying effective rate you had for 2017?
Wissam Jabre
Thanks and good question. So as I indicated in my comments, we had a couple of one-offs that impacted our ETR for 2017 positively. I don’t expect those to repeat. Those were mainly FX-related effects and they were unpredictable. So the way to think of it is, if we adjust for those in 2017, it would have been closer to around 22% ETR, and as we’ve said in the past, we still expect that in the next – with 2018 and the following years an improvement of around 50 to 100 basis points per year. So for this year, I would expect a 50 to 100 points improvement from the 22% ETR of 2017.
Andrew Gardiner
Okay. Thank you, very much.
Wissam Jabre
And those – just to make sure that it’s clear, those are on underlying basis.
Operator
Thanks very much. Our next question comes from the line of Quang Tung Le from Credit Suisse. Quang please go ahead, your lines in now unmated.
Quang Tung Le
Hi, thanks for taking my questions. I have a question regarding your 2018 gross margin guidance. If you look at 2017, you also guided to be in line with previous year and at the end you said it’s going to be slightly above that. Is it going to be similar in this year, is your guidance more of a conservative or if you could give more color on that?
Wissam Jabre
So, thanks for the question. So the guidance is obviously based on all the information we have and our plan for the year and it’s considered basically collective outcome of all the information we have. We do expect 2018 to be broadly in line with 2017 and that’s not necessarily untypical. What we typically see especially when you start getting into the second half of the year with launching new products, at launch these products are typically not optimized from a manufacturing cost perspective, so there is usually a bit of headwind and so by the later in the year when we start exiting the Q4 time frame and we have very high volumes behind us, we see better improvements. So at this point in time, I would say the guidance is based on all the best information that we have and it’s broadly in line with 2018.
Quang Tung Le
Thanks you.
Operator
Okay. Our next question comes from the line of Veysel Taze from ODDO. Veysel please go ahead, your line is now unmated.
Veysel Taze
Yes, thank you. For taking my question. The first one on 2019, if I may. If I recall from the previous call in December then I thought despites and the sample chips for 2019 were already delivered and the question was to negotiate the volumes. And now it looks your communication has changed, saying now, okay, we will deliver sample chips; a clarification on that one would be really very helpful.
Jalal Bagherli
Okay Veysel, I think there is some miscommunication because I think what I said was the samples for 2018 were delivered. Remember these products won’t be released on until September of each year roughly. And so what I was talking about back last year in Q4 was samples for the 2018 product released. Because you need an about a year before the end-products gets released. The 2019, we were talking about preparing and evaluating advance IP for potential use in the 2019 and what we are saying today is that’s gone much further forward and we are in advanced stages of developing those chips for 2019. So I don’t – we are not changing the message.
Veysel Taze
Okay. And then from your presentation you said you have scored new design wins at the same time you have for 2019. The main PMIC, I think it’s mainly for the iPhone, right? What you might lose or rather speculation was with 50%. I mean, how should we see the – if you want to see the downside for 2019? What would you recommend to look at, I mean, do we look at the iPhone shipments and say okay 50% of this, and then you have some new design or did you run some downside scenarios, which you could help us with?
Jalal Bagherli
I think it just so early that’s in our – we don’t want to talk speculatively so much about 2019; we are just starting 2018. So I think some, I guess, analyst evaluation would be that it would be the main socket for the phone. And as we said, we are discussing the volume and pricing, it is not concluded, and we don’t know the extent of that. For modeling purposes, you may want to assume referring back to 2017 that one main PMIC of 2017 volume shared, if you like, but beyond that everything else remains intact as previously, and as I said, the architecture of the devices are changing in terms of the end equipment. So you have one main PMIC and as you noticed in 2017, we shipped two chips; the second one was smaller sub- PMICs, right. And we think this trend will continue in the sense that there may be more sub-PMICs and those are not subject to the conversation on sharing today. So we may see, for example, in 2017, more sub-PMICs and this what we see as a trend that is getting more distributed, but the contentious from the core, if you like, PMIC is the one that was in discussion about potential sharing; it wasn’t the rest of the business or rest of the system.
Veysel Taze
Okay. To sum up, it’s one main PMIC what is going to be shared; the rest of the business is not at discussion right now. Is that correct?
Jalal Bagherli
It is and we don’t know whether it will be shared, at what ratio of sharing if that volume may be is – it is not come through that, so it’s very – I can’t tell you more than what I have said.
Veysel Taze
Okay. Just briefly, really, if I may, two very quick ones. And the new areas where scored new designs, is it also related to the sub-PMIC topic or is it something completely new there in audio space or analog mixed signal or with your Silego topic, if you can give a little bit color on that?
Jalal Bagherli
I mean the one specific since middle of Q4 are a number of sub-PMICs, I would say. We do already have the main PMICs of other products for those years, for example, for if you think about tablets and wearables and computing, we already have the other larger sort of PMICs already for those years. So the backend of the year was primarily smaller sub-PMICs, a number of them and that shows the continuing collaborative relationship we have. We are getting more serious access to also other non-PMIC designs. I can’t report winning one yet, but we are looking at other technologies outside PMIC with strong IPs that we’ve created and we have a good chance to resolve those and I’ll report those as we gain. But it is not something that I can confirm today. In terms of Silego, Silego already has existing exposure to a large customer and that continues on a healthy trend. Their technology tends to be outside performing in other areas that we’ve mentioned previously when we were discussing Silego portfolio. So typically tablets, notebooks and wearables are where they scored high, and they have a historically been in the mobile phone business.
Veysel Taze
Okay. Jalal, just really a very quick one. Are you planning to give kind of a mid-term view for the company? I mean that seems to be, for the stock, the most decisive one right now, what is the business beyond your largest customer. Are you planning to give kind of mid-term target again, and if yes, when can we expect to see something like this?
Jalal Bagherli
We would like to do that but I think we believe we need to also get more clarity on the main business, because we feel it is not the complete history if you hold a mid-term modeling with us being more explicit on the biggest component of the business. So I think once we got more clarity, it would be more beneficial than just focusing on, if you like, mobile and non-PMIC business. So that is our plan and we hope to be able to do that sometime this year, hopefully sooner or later, but we’ll inform all of you once we have that date is fixed.
Veysel Taze
Okay. Thank you, very much.
Operator
Okay. Our next question comes from the line of Robert Sanders. Robert Please go ahead, you line is now unmated.
Robert Sanders
My first question was just around the second quarter, you’ve talked about second half waiting, but clearly, your largest customer seems to be continuing to cut into – cut production numbers into Q2. So what does that mean to your Q2 outlook? And then the second question would just be around gallium nitride. If you got any update there in terms of your efforts and when will this become material to your revenue?
Jalal Bagherli
So I think all we can say is what is laid out in the press release from a forecasting point of view. So – and that’s based on looking at the customer demand, the backlog and the forecast, et cetera. Typically in terms of backlog, we can only comment for the quarter and they change a lot all the time.
So what I said about Q2 won’t be necessarily true when we get to Q2, so rather I avoid that question. It is – but the shape and profile of the business remains heavily weighted second half over first half and we have said that for last, I don’t know, 3, 4, 5 years and every year it is the pattern. And that’s what we report to you and we forecast to you and I hope that’s consistent with the data from the past, but you can see it is actually the case just because of the seasonal trends, there is no magic in this.
Once and when we diversify away from mobile with other products more or the weighting moves that clearly will change. But until such time there majority of our revenue comes from the Mobile and equipment stem – the second half over first half remains – there is no mystery to that. On the second question on GaN, we have actually broaden the solutions, so I think we talked about the GaN as the power device and then we also have developed new architectures for high-power device controllers that goes with that goes with the GaN, if you like.
So all of those are progressing apace. We have been able to demonstrate the new controller architectures to a number of customers. And some of them have commented that GaN is a good solution to go with the controller, they also like to try with other high-power devices. So we are broadening the applicability of the controller.
The GaN devices that we are going through qualification, reliability, data gathering; the reason it takes a little bit of time is because, it is not as established the process with foundries as CMOS or other technologies are for years, and there isn’t really a body and history of data in terms of reliability and qualification.
And we just want to make sure we take our time and establish all the variability in the manufacturing of gallium nitride. So there’s nothing unusual about that. It is just as if it is new material, new device for us and for most of the industry, by the way. So we believe we will be able – we have shown samples to customers but they haven’t released.
But we expect to do qualify sample releases to customers by, I would say, Q2 this year. So it’s not that far, but as I mentioned earlier, the high- power device controllers also will be released at the same time as a part of the solution, but they can also be used on their own bit, for example, high-power MOS technology as well. They are not only confined to the GaN power device only. So probably a strongly longer answer than you expected, but that’s kind of hopefully gives you the full context.
Robert Sanders
That’s great. Thank you.
Operator
Our next question comes from the line of Robin Brass from H&A. Robin please go ahead your line is now muted.
Robin Brass
I have one also concerning, I mean, I have seen too the last weeks especially during the Mobile World Congress, many smartphone vendors are showing newest developments in augmented reality and so on and so forth, and I guess, power management is also a key topic here to limited drain, I guess, of the battery overall. So how do you see going forward over this development? Is it also a chance for you to get more design wins or could is it fair to assume that, let’s say, the pie is already split and it’s really hard to get any additional than those in the future here?
Jalal Bagherli
So I think that’s a relatively new area. It also depends on what you actually mean. So actual processing of augmented reality and/or artificial intelligence depending on which area they go does take place on the processors and the core processors and they require power management – more power management capability to manage.
So from a power management point of view, whatever goes into the system or sub-PMICs supports any AR function that they may want to run from a processing point of view. So that’s one element of it. But most of the AR also come with a wearable – or at least the AI part comes with some kind of a wearable goggle or glasses, et cetera, and bit controllers and many of these controllers also open up the opportunity for us in nano power but also at least in the last 12 months, we’ve seen a lot of Bluetooth low energy takeoff.
And so our devices are used in a number of controllers, for the – if you like, what people wear over their eyes while they’re watching AR or AI generated images. So those are the opportunities for us that we see today.
Robin Brass
But is it also there a possibility that you might win here another major smartphone vendor in that sense or how do you see basic possibility here of 2018 or 201?
Jalal Bagherli
I would say, for the headset, yes, for the controller. For the phone, it is not – people don’t have a separate device for powering the AR part. It is – if you win in a smartphone it is the power management that powers up the processor and everything including AR. So it doesn’t change the landscape so much for us in that sense.
Robin Brass
And maybe a second question real quick. Is there any – related sales towards Energous guidance already included or how can we see also 2018 when it comes to the Energous sales here?
Jalal Bagherli
So Energous, as we said earlier, I guess in Q4, we’ve talked about the FCC approval. It is a relatively longer design in cycle because we now have a whole we now have a whole broad product portfolio that the customers started to evaluate designing into their equipments. We also said at that time that there is 2 or 3 very small innovative fast-moving customers with small volumes are adopting – as early adopters. So those are going ahead and we probably see some small revenues in the second half.
The larger customer typically take more time, more established OEMs, because they have to make sure equipment compatibility across a number of products and also each company or each design has to go through a certain amount of customer certification or consumer certification and FCC or equivalent, so FCC in each country, to get approval. Now the pass for that approval is now laid out, so it’s a lot quicker and easier, but nevertheless once the design and equipment, their customized antennas and the other pieces they have to actually go through the approval cycle. So we expect most of that work to be done in 2018.
I don’t expect for the big OEMs to generate revenue this year. We may be conservative in this area. So we have not included a large part of revenue in our forecast for this year, but that’s purely because we don’t have visibility of those as the brand new technology going into a new market. Now we may be positively surprised in the latter part of 2018 with maybe a large customer adoption that’s – if we get visibility of that then we obviously update the market.
Robin Brass
Okay thank you very much.
Operator
Our next question comes from the line of David O’Connor from Exane. David please go ahead you line is now unmuted.
David O’Connor
Maybe Jalal, firstly for you. So you’re suggesting you can retain the main apps processor PMIC in the 2019 iPhone, but maybe a bit too early to know the details. Just wondering what’s the timeline on more clarity emerging on your low kind of volumes for that firstly?
Jalal Bagherli
I don’t think I can give more than what I said because negotiation takes its course. Remember, these products will come out hopefully September 2019. So that’s like quite a long time from now. There is no urgency for trying everything down necessarily from customers' point of view and we are developing the products with their encouragement and collaboration, which we will sample in the second half of this year.
We have to book capacity at some point, right, for 2019 and that usually takes place in Q4. So there is time between now and Q4 to really tie that down knot. My personal hope is that we get this done a lot sooner than that, but that’s kind of just elapse the potential time schedule.
David O’Connor
And then maybe like long- term looking beyond that, I mean, what is your expectation long-term for the system PMIC. I mean, is your baseline assumption that you will ultimately lose that but can offset any potential content loss by gains elsewhere. I just wondering how you think about that in the more longer-term?
Jalal Bagherli
I think the answer is, we don’t know, to be honest. And again, we’re talking about 1 product, which is admissibly is a large volume and large revenue for us. At the same time, as I indicated, we see the architecture to be evolving into multichip solutions. We’ve already seen a 2-chip solution.
Our assumption or current expectation is that this could be multichip solution in the future and this seemed to be gaining more visibility, more proximity to the sub-PMICs that’s going to the same platform to affect that evolved architecture. So it’s hard to pan out something in 2020, 2021 at this point, because there’s a lot that can happen from a competitive market point of view and architecture evolve and change. So I don’t want to lay out some hard road map. My expectation is that even if you were to share some of the main sockets that would be additional sockets that we could claim as our own. In terms of the smaller PMICs, as I indicated earlier, we are looking at also seriously or actively engaged in bidding for other non- PMIC parts going into the same end equipments, which are all mixed signal parts and collectively that could either counter at least alleviate any sharing of the main PMIC socket. So that’s all as much as I can tell you.
David O’Connor
Okay, that’s quite clear. Thank you. Jalal. And maybe one follow-on for Wissam. So just looking consensus plus 15% top line growth for 2018, would you describe us consistent with your commentary on 2018 being a year of good revenue growth?
Wissam Jabre
I mean, look, I would reiterate to what we said qualitatively about the year that it’s really – we expect it to be a year of good growth. From – in terms of free the tie and get down to a percentage growth, I think it’s a little bit too early for us to guide quantitatively, but qualitatively we – expectations are that we will have – we’re expecting a good year of growth. I’m not really sure I’m helping you out much for the answer, David, but –
Jalal Bagherli
David, we always talk very broadly about the year and we give detailed guidance for the quarter in question and this is what we’re doing again this year. And you can see if you look at what we’re guiding for Q1, is a significant growth over the same quarter year-ago. So that’s a good start towards that good growth here. And we can only update as we go. This is a very dynamic cyclical market. So it just proves to be really the wrong thing to do to give detailed guidance so far ahead.
David O’Connor
Okay. Thank you, Wissam.
Wissam Jabre
You welcome, thank you.
Operator
Okay. We have a question from the line of Guenther Hollfelder from Baader-Helvea. Guenther please go ahead your line is now unmuted.
Guenther Hollfelder
In the press release, I think you are repeated that you recognized that Apple has the resources and capability to design a PMIC of its own. So I was just wondering – so you are – right now your visibility whether Apple will use a PMIC of its own in products, is still pretty much unchanged and is it pretty much related then this visibility with the volumes discussions you expect during the year?
Jalal Bagherli
I mean, as we laid out earlier, we are in commercial negotiation and once it is finished then I can be more certain about our share of volume of that particular socket. Until then I have to assume that there is a sharing of products for the September 2019 with internal design for that one socket. So that’s all the information that I can reliably share with you. Beyond that is, I have no visibility to any other way that might evolve.
Just suffice to say again the relationship remains strong and the number of awards we get is higher than ever, we’ve had in terms of a number of products that we are starting to develop, not finishing – just starting to develop numerically more ICs than ever before and in more departments and more products than ever before.
So we are very positive on the relationship. And it is a relationship that evolves like any other relationship – we’ve been there over 10 years, and things change in this industry, it’s a fast- changing industry. So it is a magic that you know we’ve maintained and grown for 10 years and we are an adaptive agile company, that’s where we take pride, and as things change, we will change with it and vis-à-vis because we are accustomed to change and the company can react to the shape of change.
Guenther Hollfelder
Okay, thanks. And the second last question on the average content per device you provided on Page 8. If you have like second power management related trip or sub-PMIC in one device, is this in this charge dilutive to that the average selling price or is it adding to the average selling price?
Wissam Jabre
Yes, so let me take this one. So the chart itself represents the weighted average of all the various products that are sold to our largest customers. And so it is a little bit of a sort of mix of products that are – some of them are more valuable and more expensive than others and some are less, but the quick answer to your question is, from a content per device, the answer would be no, it’s not dilutive. Actually, it will be accretive.
Guenther Hollfelder
And I think for Mobile Systems you reported 13% sales growth, so there was quite a strong unit growth and then also behind this number, I was just wondering what applications whether phones or wearables, computing, what’s the driver behind this unit growth?
Jalal Bagherli
So I think – you see unit growth in wearables, you see unit growth in tablets for the first time after several years, tablets turned around and that has growth in 2017 and I think in other areas we also see healthy growth in terms of the computing devices not to the same extent, but there was growth also in computing. And the good thing is, our contents also increased in the – all the before mentioned product line forwards – our visibility for content growth in wearables in computing and also in tablets. So we feel very good about both the volume and the company.
Guenther Hollfelder
Okay, great. Thank you.
Jalal Bagherli
You welcome.
Operator
Our final question comes from the line of Robert Sanders from Deutsche Bank. Robert, please go ahead. Your line is now unmuted.
Robert Sanders
Just a quick follow-up question, Jalal. You mentioned that you would like to get more into a broader range of mixed signal IC’s, so I would assume things like audio, display, touch these kind of things. So on the one hand that’s a great thing that increases your TAM, but the other hand, it requires more R&D resources. So how ready are you do you think to compete with companies like Cirrus Logic or STMicro for the power management business that they display at Apple, for example or Synaptics? I mean are you – how ready are you to have the necessary resources and IP to compete with these guys? Thank you.
Jalal Bagherli
Thanks. A good question. I think, Robert, if you look at where we play, we typically – the problem is these types are pretty broad. So when you say somebody is in audio, there is a massive chain of parts that go into an audio signal processing chain. So just because I say I’m interested in audio doesn’t mean necessarily I am after Cirrus Logic sockets or Maxim or whoever. There are parts that make up the chain.
Similarly, for other areas like charges. The phone charges I think in different versions, with different parts, for example, there could be the supplementary chargers, slave chargers, master chargers, quick chargers inside the phone. I’m talking not the Ti, and where we play typically is we don’t go after something necessarily where we start from zero because that doesn’t give any competitive advantage. So we try to find narrow areas where we do have prepared IPs either through other developments already or focused development to get into specific custom circuits where we do have competitive advantage.
So we are not trying to go head to head with existing, if you like, almost semi catalog parts. That’s not the intention if that helps. So the areas we focus are areas that we do have a substantial amount of existing IP, which may not be apparent to the outside world, but we’ve had audio for example developments in Edinburgh for a number of years. We have audio developments and the algorithm and DSP in Holland in Den Bosch for a number of years.
We don’t bring them out necessarily to the market attention as a standalone stuff because they are combined or integrated into other solutions. So – but it doesn’t preclude those from playing in that market. We have base technology. Similarly on chargers, we have very advanced technology of chargers for the phone and we talked about high voltage chargers in 2017, so some of those capabilities already developed.
You recall also, we developed some products for the – our partnership with Spectrum in China, for example, over the last year, now included in that there is a number of new areas to do with, for example, OLED display. The parts that we released to market there, fast-charging, integrated; we have capability of haptics develop for that customer. So all of those will give us, if you like, cornerstone of the IP that we could bring in to a new solution for another customer very rapidly.
Robert Sanders
That’s helpful, thanks.
Operator
So we have no further questions. So I will hand back over to Jose.
Jose Cano
Thank you, Josh. Thank you everyone for joining us today. As usual, if you have any further questions, please don’t hesitate to contact me or a member of the FTI team. Thank you.
Operator
Thank you very much for joining today’s call. You may now replace your handsets.
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