Good day and welcome to the Qorvo Inc. Q3 2020 Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Douglas DeLieto, Vice President, Investor Relations. Please go ahead.

Douglas DeLieto - Vice President, Investor Relations

Thanks very much, John. Hello, everybody, and welcome to Qorvo's fiscal 2020 third quarter earnings conference call. This call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the safe harbor statement contained in the earnings release published today as well as the risk factors associated with our business and our annual report on Form 10-K filed with the SEC because these risk factors may affect our operations and financial results.

In today's release and on today's call we provide both GAAP and non-GAAP financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non-cash expenses or other items that may obscure trends in our underlying performance.

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

Sitting with me today are Bob Bruggeworth, President and CEO, Mark Murphy, Chief Financial Officer, James Klein, President of Qorvo's Infrastructure and Defense Products Group; Eric Creviston, President of Qorvo's Mobile Products Group as well as other members of Qorvo's management team.

And with that, I'll turn the call over to Bob.

Robert Bruggeworth - Chief Executive Officer

Thanks, Doug, and welcome everyone. Qorvo delivered record EPS in the December quarter, driven by strength in our end markets of 5G, Wi-Fi and Defense. I'm especially pleased with how our team is engaging with customers to enable breakthrough products and contribute to a multi-year technology upgrade cycle.

In mobile products, the acceleration of 5G is driving demand for Qorvo's high-performance and highly integrated solutions. Carriers are bringing advanced 5G services across new frequency spectrum and that's driving greater complexity and handset designs as board space remains constrained. Qorvo's solving that complexity by integrating the industry's broadest portfolio of technologies and advancing the state-of-the-art and functional integration.

Looking at December, we enjoyed significant design win traction for our BAW-based multiplexers across a range of band combinations, including our hexaplexers and our recently launched micro BAW-based quadplexer. These are multiplexers enable advanced carrier aggregation and they are critical to next generation higher data rate applications. We also secured multiple design wins to supply low, mid, high and ultrahigh band solutions for next generation 5G smartphones. These are highly integrated and high-performance 4G, 5G solutions enabling customers to reduce product footprint, enhance system performance and deliver products to market even faster.

Design wins for our ultra-high band FEMs were broad-based across customers and made it with multiple 5G cellular chips, chipsets. Qorvo's solutions deliver highly differentiated performance at higher frequencies as we expand our content in the next wave of 5G smartphones. Consistent with what we said last quarter, we continue to expect approximately $300 million 5G handsets in calendar year '20 adding approximately $2 billion to the mobile RF TAM.

Turning to IDP, our GaN customer engagements broadened during the December quarter as we ramp GaN high-power amplifiers and small-signal components at a third major OEM in support of 5G massive MIMO deployments. To support China Mobile's deployment of 5G small cells, we ramped our newest BAW filters at a top-tier infrastructure OEM. We also introduce breakthrough gas FEMs addressing the more demanding requirements of second-generation 5G millimeter wave base station.

In our connectivity business, we enjoyed a rebound in demand driven by Wi-Fi 6 and supported by our recently released gas and ball processes. Customer demand for our newest Wi-Fi 6 FEMs was broad-based in support of CPE, retail and mobile applications. For the connected home, we begin sampling the industry's first radio solution combining ZigBee, Thread and Bluetooth low Energy SoC with a Wi-Fi 6 FEM to enable next generation distributed Wi-Fi networks.

For the connected car, we introduced the complex, excuse me, we introduced the complete V2X front end solution featuring our recently released 5.9-gigahertz Wi-Fi coexist BAW filters, which are quickly gaining traction among automotive OEMs and tier-one suppliers. Finally, we continue to expand our customer base in the Programmable Power Management end market shipping power management ICs in the datacenter solid-state drives for two of the top three storage providers.

After the quarter closed, we signed definitive agreements to acquire Decawave, a pioneer in ultra-wideband solutions for mobile, automotive and IoT applications and Custom MMIC, a leading supplier of high-performance GaAs and GaN MMICs for defense and aerospace applications. Adding Decawave establishes our position in the emerging markets for ultra-accurate, ultra-secure short-range location solutions. Custom MIMIC expands our portfolio of high-performance GaAs and GaN solutions for the defense and aerospace industries.

Looking forward we see both IDP and mobile products growing year-over-year in the March quarter, on the strength of our broad technology portfolio and strong underlying trends in our end markets.

And with that, I'll hand the call over to Mark.

Mark Murphy - Chief Financial Officer

Thanks, Bob, and good afternoon, everyone. Qorvo's revenue for the third quarter was $869 million, $19 million above the midpoint of our guidance and driven by stronger than expected mobile demand. Mobile revenue of $662 million exceeded our expectations on Asia-based customer demand, including 5G solutions.

IDP revenue improved sequentially to $207 million on strong defense volumes and remain down year-over-year due to export restrictions on infrastructure products. We expect IDP revenue to increase again sequentially and return to year-over-year growth in the March quarter on sustained strength in Defense, the ramp of Wi-Fi 6 and broader 5G infrastructure customer demand.

Non-GAAP gross margin in the December quarter was 49.3% with better than expected manufacturing costs and favorable mix effects. Non-GAAP operating expenses were $176 million, which were at the low end of our guidance range. Non-GAAP net income in the December quarter was $221 million and diluted earnings per share was $1.86, $0.19 over the midpoint of our guidance.

Cash flow from operations in the December quarter was $301 million and capex was $41 million, which yielded free cash flow of $260 million. Our free cash flow through the first nine months of fiscal '20 was over $600 million exceeding any prior full fiscal year. We repurchased $125 million of stock in the quarter and completed an opportunistic $200 million add-on to our 2029 unsecured notes issued earlier in the quarter.

During the December quarter, we completed the purchase of the remaining equity in Cavendish Kinetics and RF MEMS company, further strengthening our technology portfolio for switches, tuners and other products. As Bob mentioned, following the quarter end, we signed definitive agreements to acquire two companies that we have been evaluating for extended periods.

With both companies there is excellent strategic alignment and cultural fit. Decawave, a pioneer and leading supplier of ultra-wideband solutions, adds to Qorvo's RF technology leadership and opens up access to a large new and rapidly growing wireless market.

Custom MMIC, a leader in high-performance GaAs and GaN MMIC solutions for defense and aerospace markets is a bolt-on to core business. The combined purchase value of these two acquisitions is approximately $500 million, which will be funded from existing cash on hand. Our guidance assumes both transactions closed in February. And the financial impact, slightly dilutive to earnings in the near-term is reflected in our March guide.

Turning to our March quarter outlook, we expect revenue between $800 million and $840 million or $820 million at the midpoint. Non-GAAP gross margin of approximately 48.5% and non-GAAP diluted earnings per share of $1.55 at the midpoint of our guidance.

Our revenue outlook for the March quarter reflects continued robust mobile 5G demand and a return to year-over-year growth for IDP. For mobile, we expect March quarter sales to decrease sequentially, but with less than normal seasonality. For IDP, we project March quarter sales to increase on sustained strength in Defense, the ramp up of Wi-Fi 6 and broader 5G infrastructure customer demand. While Qorvo's current near-term outlook is strong and channels are healthy, trade, and other factors including potential demand and supply chain effects related to the Coronavirus concerns contributed to challenges and uncertainty forecasting the outlook.

On gross margin, our March quarter guide of approximately 48.5% is down sequentially. Consistent with comments I made during our last earnings call. Non-GAAP operating expenses are projected to increase in the March quarter to approximately $185 million on higher personnel costs including payroll effects and incremental costs associated with acquired businesses. Net interest expense will increase with our notes at on and a lower cash balance following acquisitions.

We expect our March quarter non-GAAP tax rate to be approximately 7.5%. On capital expenditures, we project, less than $190 million this fiscal year and remain highly disciplined on adding capacity. Our free cash flow forecast for the year is now over $700 million. As of December quarter results and our March outlook show Qorvo is helping customers grow in 5G, Wi-Fi, Defense and other markets. By solving their challenges with best-in-class technology, award-winning quality and supply dependability.

With that, I'll turn the call back over to John for questions.

Question & Answers

Operator

Thank you. [Operator Instructions] And our first question comes from Karl Ackerman with Cowen and Company.

Karl Ackerman - Cowen and Company - Analyst

Thank you, gentlemen. I have two questions if I may. The first question is on margins. So, I guess the seasonal softness in the March quarter. But as you finalize the consolidation of your soft fab and Greensboro - to Greensboro, your 5G ultra-high band pad FEM content likely proliferates across the top six mobile OEMs later on this year and IDP returns to growth in the back half, why can't operating margins approach 30% by the end of this year.

Mark Murphy - Chief Financial Officer

Yeah. Karl, two - this is Mark. two effects on operating margins in the March quarter. One is, and I'll start with opex. As I mentioned, opex is going to increase sequentially due to a number of factors payroll effects and the incremental costs associated with the acquisitions. Moving up to gross margin. Consistent with what I said last quarter, we will see a sequential decline in gross margin, which is typical around seasonal product mix effects. So, yeah, this is very much in line with what I said last quarter about 100 basis point or so decreased sequentially.

Karl Ackerman - Cowen and Company - Analyst

Got it, thank you. For my follow-up, regarding remarks outlook, it seems your base assumptions call for us slightly less seasonal decline that I guess a seasonal decline in your largest customer but a sizable uptick at China handset providers and maybe some stability at your Korean customer given all design wins, you alluded to last quarter, and of course earlier today in your prepared comments. First, am I thinking about that in the right way. Second, how should we think about the revenue opportunity from China handsets. I think for the overall industry, would you endorse content from mainstream handsets advancing from $1 to $2 to like $6. Thank you.

Robert Bruggeworth - Chief Executive Officer

The car. I'll take the beginning of that. From a perspective of just looking at a year-over-year. Both businesses are returning to growth year-over-year. That's great to see. Our IDP business sequentially is growing very nicely. So that's also offsetting some of the seasonality. It's typically flat to up slightly, so that's doing well. In our mobile business, very pleased with how much were offsetting year-over-year. The decline that we've seen at Huawei and it's broad-based. So, we're seeing strength across the customer base, but I'll let Eric a little more color to the specifics of the customer base that you asked about.

Steven “Eric” Creviston - President of Mobile Products

Sure. Yeah, as you referenced the 5G rollout in China is very much on track and content gains there associated with more bands and wider bands and multiple carrier operation and so forth is leading to an expansion of dollar content, as well as units a bit higher than we had originally planned. In terms of dollar content opportunity that you referenced, it's not at all unusual in these 5G handsets to see total dollar content in the $10 to $12 range. And they tend to buy as much of that is possible from one suppliers. So, we have many handsets in China now, we have $8 to $10 worth of RF content.

Operator

Our next question comes from Toshiya Hari with Goldman Sachs.

Toshiya Hari - Goldman Sachs - Analyst

Hi, guys, thanks for taking the question and congrats on the strong results. My first one was on IDP, you guys talked about Wi-Fi 6 and comms and Defense contributing to growth in the March quarter. Can you kind of help us quantify sort of the magnitude of all three on a relative basis and if you can speak to sustainability beyond the March quarter for those three buckets that would be helpful. And then I have a quick follow-up?

James Klein - President of Infrastructure and Defense Products

This is James, now that year-over-year growth will be relatively small but considering, we lost one of our top customers. Just a few quarters ago I am really pleased with the efforts of the team to return back to grow so quickly. I think it does demonstrate the underlying strength of the products that we have in the markets that we serve defense, low power wireless and power management will all have double-digit year-over-year growth quarters in March. Wi-Fi, as we've talked about with the ramp of Wi-Fi 6 is returning. And it will have a high single-digit type growth rate and then other markets that we serve. I think will be a mix of up and downs. Still at the face of deployments in base station where we're starting ramps and starting to recover, but with loss of Huawei we're obviously still significantly off of our all-time highs in base station.

Toshiya Hari - Goldman Sachs - Analyst

Got it. And then my second one is for Mark, in terms of free cash flow, it looks like for the full year you are thinking, free cash flow margins of 22%-ish based on your Q4 revenue guide and your full year free cash flow commentary, which I think is the highest free cash flow margin since the merger. I guess importantly going forward, do you feel like there is more upside from there or is this as good as it gets. And to the extent you do think there is more upside. What are some of the levers that you can pull to improve margins and then sort of related to that as you continue to build cash. How are you thinking about cash usage between organic - organic investments M&A and shareholder return? Thank you.

Mark Murphy - Chief Financial Officer

And there is a lot in that question here. I'll - I'll work through it so yeah, we're really pleased with the progress we've made on free cash, and it's been, it's absolute focus for the company. We've gone from $224 million free cash flow in a year, up to we're now forecasting over $700 million just in a number of years here and we reached close to 30% basically Brian right almost on top of 30% in the third quarter of free cash flow margins and I think that's an objective we set some time ago for the full year, so we're not going to, as you said, we're going to be closer to 22%, but we continue to see the ability to expand free cash flow margins and it's - nothing as really changed there. I've gone through this in previous calls. We're pursuing a model and investing in a way to achieve stronger and more sustainable free cash flow generation over time. And that comes from investing in the right technologies of which you see some of that in the acquisitions we announced today. It's selecting the right products and having a rigorous portfolio management process, which we have executed on.

It's driving productivity and operations and sourcing. And I can't say enough about the job the ops team is doing and meeting customer quality expectations and on-time delivery, and doing it efficiently and then they ops alignment with the business is as good as it's ever been in the company. So, seeing great things there. And then finally, we're just focused on reducing capital intensity and all those factors have helped with margin expansion.

On gross margin specifically, there is room to run. We believe we're still not at the utilization levels that we had hope this year. The infrastructure market softness as impacted us in a couple areas in the network particularly Texas GaAs GaN and Oregon. Yeah, we - in the fourth quarter or in the December quarter we had period costs in Florida. As I think Karl mentioned, those do drop off in March, but we still have some period costs associated with Farmers Branch and some small period cost elsewhere. And then, over time we expect IDP to improve as a percent of the overall mix. And I've talked about portfolio management, and operations, productivity and so forth. So, believe and the ability of our business to grow the top-line, we have a number of levers to expand margins. We're focused on spending capital only when we need to and then driving free cash flow growth, which allows us to make prudent investments either for accretion or technology.

Finally, you asked about capital allocation, basically in the last 12 months, we've generated $754 million of free cash flow, we've repurchased $689 million of share. So over 90% return to shareholders. And then over the - over this time. We've also completed the purchase of two companies over $500 million that's not including the two we announced today. So, we'll continue to again drive free cash flow growth and then it look for investments. It makes sense for Qorvo. We've said technology investments for both mobile and IDP and then bolt-ons for IDP is typically how we look at things and then depending on our leverage and other factors. We will return cash shareholders. And our next question comes from Harsh Kumar with Piper Sandler.

Harsh Kumar - Piper Sandler - Analyst

Yeah, hey guys. Congratulations, fantastic execution and congratulation on that cash flow number, I know you guys have been focused on that I had - I'm going to put you on spot here, Bob. You had a pretty strong mobile March guide and you're also you basically saying pretty good strength in 5G, pretty good design win traction. I take that to be that this strength in March to better than seasonal strength in March is not going to come at the expense of the rest of the year. Historically June-September December have all been much better quarters, could you just maybe to the best that you can. I know it's a tough one, but best you can provide us some color?

Mark Murphy - Chief Financial Officer

Yeah, maybe harsh, this is Mark, maybe I'll step in and we're going to, we're going to provide more information on the FY '21 at the next earnings call. As it - as it relates to June, we're not going to provide detailed guidance in that quarter either. But I think maybe this is maybe this is a time to talk about rest of the June quarter. Now, we feel good about the March quarter. This Corona virus concerns and first, our thoughts are with are with those affected in the region. But we've been revisiting our outlook based on those concerns. We're comfortable with our forecast and feel that we've adjusted for what we perceive now at some risk but we've been keeping a close eye on the situation, including extensive checks on the supply chain. To date, we've seen no material impact to our supply chain or wet demand signals.

However, the situation is evolving. So, we've - we've reflected some added risk as I mentioned to our March guide, including as you'll notice a wider range of outcomes. So, to your question, likewise, we're thinking about potential effects into the June quarter and even though our channels are lean, we are concerned about how this plays out because we just don't know. As it stands now, we would estimate the June quarter to be between $750 million to $800 million of revenue. But again, it's early, there is a lot of uncertainty around that we'll provide a more detailed update at a later date, and our fiscal year '21 view on our next earnings call.

That's fair. I appreciate you the color that you gave. As a follow-up, the strength in China that you guys are seeing maybe one for Bob or Eric. What kind of customers is that coming from. Is that coming from the tier-twos or is that also to some extent coming from Huawei at this point.

Steven “Eric” Creviston - President of Mobile Products

Right. Yeah, it's primarily you throughout Asia. So, Korea, in China as well. We're relatively high end 5G handsets are still entering the channel for now. We're beginning to also see our large customers in China. So, Vivo. Oppo, Xiaomi for example, bringing 5G further down into the portfolio of some of the handsets that we'll be launching in the March quarter.

Operator

Our next question comes from Bill Peterson with J.P. Morgan.

Bill Peterson - J.P. Morgan - Analyst

Yeah, thanks, let me ask a question and great job on the results and guide. Maybe first one for Eric. And going back to your Analyst Day from a year and a half I guess maybe closer to two years ago, you talked about some unique advantage of your boss relative to other filter technology net bar and so forth. You've been discussing ultra- high - ultra-high band wins and 79 in particular and also recently, you're talking about traction with your new micro BAW. I guess, can you give us an update on how your BAW is helping you win relative to competitors, I guess both in France as well as new entrants to some of these 5G specific bands.

And I guess in terms of other content, you've been talked in the past about antennaplexers and we haven't heard as much about that recently. But how has that been playing out. And I guess how can you meet the demand in that given your portfolio BAW portfolio? Thanks.

Steven “Eric” Creviston - President of Mobile Products

Right. Yeah. Thanks, Bill. The technology roadmap has continued to progress for us since we formed the company, we've really made it just a ton of progress in improving the performance of our SMR BAW filters and also our ability to integrate them into modules and also together to make antennaplexers and high-level multiplexers and so forth. So, so that's maturing and getting more and more competitive, every single month. In addition, of course, at the same time the markets asking for higher performance more bands are being added. It seems, every quarter wider bandwidth multi-channel operation and so forth. So, there's plenty of challenges to be met with the filter technology and it's frankly a pretty target rich environment right now for these, these opportunities. So, I think it's fundamental technology combined really with our ability to integrate it with also very, very good power amplifiers for example in the ultra-high band opportunities you the power amplifier efficiency and power levels are very important to accomplish and then of course, our leadership in switching technologies and putting all those into high-level modules together, it's very similar to the fundamental trends we've talked about for several quarters now, we're just continuing the march on driving the investments into the core technologies to - to make it better.

Bill Peterson - J.P. Morgan - Analyst

Okay, great. And I guess the next question I guess both you and James can chime in. On the top of the millimeter wave, obviously some of your competitors are talking up the millimeter wave opportunities appears like you and your closest competitor really still focused on sub-6. I guess for the mobile side, what - what do you need, there are different solutions could you bring to the market. What are the key hurdles to address, what are the key based technologies for power amplifiers, switchers filters and so forth. And I guess James said, what you spoke to a little bit earlier in the prepared remarks, but how do you see the growth of millimeter wave and the impact of his business and some of the unique, I guess, things that he can bring to the market as well?

Steven “Eric” Creviston - President of Mobile Products

Yeah. So thanks, I'll start. This is Eric. And so, the unique strengths that we bring their millimeter wave in the mobile side is really leveraging the work that James has done in the infrastructure side and defense applications developing advanced scaling arsenide processes for millimeter wave operations. So, we've released new commercial versions of those processes and have introduced those to multiple handset manufacturers and in platform providers. We're building prototypes to help demonstrate the capability of mobile millimeter wave and showing what could be done in terms of thermal dissipation and power efficiency and battery life and so forth. But at the end of the day, I think the big question is, this was the business model is going to close on it. I think there is a lot of challenges in millimeter wave in a mobile application, by definition, you're moving in a mobile application and the path losses is quite high millimeter wave. So, so we'll see. We're certainly getting demonstrations out there. You're seeing carriers put up a millimeter wave and multiple cities and we're going to be participating in helping to validate the market.

James Klein - President of Infrastructure and Defense Products

And Bill, this is James. And as far as infrastructure is involved. I mean, we're certainly engaged and very similar to what we showed in in our Analyst Day, almost a couple of years ago about how we see more and more of those systems using gas-based front ends getting away from pure silicon solutions because it's just a much more efficient implementation. But we also are also seeing fixed wireless come on board. And the last mile, if you call it, and we've really some products this last quarter to start to address those kind of parts of the market and again kind of leading the industry efficiency based on those gas processes in particular, some of the smallest gate links that we released in production. So, really high frequency focus tie back activities.

I also want to add to the BAW question. We talked about how BAW is enabling inside mobile, Eric did, but it's also been a big benefit for us in the Wi-Fi market. We've released IFMs [Phonetic] in 2.4 gigahertz and we've been sampling those at 5-gigahertz as well. We're also using our new 5 GHz processes to release products in the automotive space and into small cells and base station. So, we are using our filter technology to really allow us to compete in several different markets and for me, particularly in the higher frequencies.

Operator

Our next question comes from Timothy Arcuri with UBS.

Seth Gilbert - UBS - Analyst

Hey, this is Seth Gilbert [Phonetic] on for Tim. Just I guess a follow-up to one of the earlier questions. June is usually up something like mid-single digits quarter-over-quarter and September is usually are well into the double digits quarter-over-quarter, so just curious of this much new hire this new higher base from March. Is this still the right way to think about seasonality as we look out into June and into September? Thanks.

Mark Murphy - Chief Financial Officer

Yeah, hi. The set. This is Mark. I reluctantly go to June, because of the Coronavirus concerns and I gave - I gave a revenue number there. The only thing I would, - I would add just to make sure folks - folks are appreciative of it. We tend to go down from our March to June quarter on gross margin. So, we would see the revenue guide I gave. And then we would see a gross margin in the 47 somewhere between 47 and the high 47s, low 47 to high 47. So, and then we have opex increasing, but beyond that, I'm not going to talk about September. I'm not going to give detail on fiscal '21. I would just say that we believe we're investing in the right areas with the - and selecting the right products, building or I capabilities to support growth in the market and we expect to grow. And then - and then we're driving for free cash flow generation. And I'll provide more in during the next earnings call.

Operator

Our next question comes from Chris Caso with Raymond James.

Chris Caso - Raymond James - Analyst

Yes, thank you. I guess first question is about the content opportunity between the premium tier in the mass-tier phones when you transition of 5G and I guess in the 4G generation, the most of the content, was in the premium tier phones that was, if I look at your total content opportunity that was largest part of your mix. Does that shift somewhat as you move to 5G because you're moving those mass tier phone low content to something. How does that change your sort of mix exposure of your total revenue between sort of premium tier phones and mass tier phones obviously realized mass tier phones represent more volume.

Robert Bruggeworth - Chief Executive Officer

All right. That's an excellent question really. And I mentioned a little bit ago seeing not unusual to see $10 to $12 worth of RF content and sometimes even higher in some of our China-based handsets, which are primarily master there at the higher end today but that's what's driving down into the mass tier as we speak. So, if you look at kind of percentage increase from 4G to 5G is much, much higher there, it's, it's more like a 2 times in content now, and as we've talked about before, it's not only adding the 5G proper, if you will, content but also bringing all the 4G up to - up to a higher levels of capability as well in each of those 5G handsets. So, to your point we see content increases in the premium tier for sure. But as a percentage of the total there, we are on the order of call it 20%, 25% of content increase. We're in the master you're seeing more like a double or even more of content. So, it does tend to mute the mix effect, slightly, I would say as we go into 2020.

Chris Caso - Raymond James - Analyst

Yeah. That's helpful. Thank you. As a follow-up, if you can talk a little bit about, ultra-wideband and obviously you sound like you did an acquisition in there. I guess how important is ultra-wideband to you in terms of - in terms of revenues today and I guess where do you see it going. Not just within handsets, but also opportunities for ultra-wideband and IoT type devices. How significant cannot be?

Steven “Eric” Creviston - President of Mobile Products

All right. It's another good question. We - as you probably know, we are the leading supplier of ultra-wideband front ends today into the mobile handsets, although it's a relatively small market today, but it's really just emerging. And I think between the fact that it's now beginning to penetrate mobile handsets, we believe it will eventually be absolutely required in every handset that combined with the fact that the connected car consortium has adopted the technology for the future, keyless entry systems. We think this is really just the very beginning of an inflection point.

We are absolutely thrilled to be adding Decawave, a fantastic company. Great, great people, great technology they've been at this 15 years really truly pioneered. As we said the technology and so, we see beyond the automotive and the mobile applications, we think a whole host of both consumer and industrial IoT applications are there as well. So, when we look forward by 2024 we're modeling it $2 billion to $4 billion worth of additional TAM. And we think there'll be just a few people position to capture it, so, pretty exciting.

Operator

And our next question comes from Ed Snyder with Charter Equity Research.

Edward Snyder - Charter Equity Research - Analyst

Great, thanks a lot. Eric, on China. How much of your strength there. I mean is from say, I want to post the different factors that are affecting China because obviously becoming a very big part of your business. But - so if you could maybe give us some idea of how much of it's coming from 5G content upside versus 5G being pushed into more phones and we expected versus OEMs moving their old 4G Phase II designs to module. So, 5G content versus units versus the shift to modules in 4G. IF you could, what - what percentage of your revenue do you think you're getting from China at this point. And then, James. It sounds like defense is not only acting as you expected, but also leading the charge may come just announced on the call last night. They're finally getting to GaN on silicon carbide. So, I'm trying to get an idea of how sticky are the applications for your again on SIC in both 5G base stations. And then if you could talk some degree about how that applies to defense too. And then I have follow-up. Thanks.

Steven “Eric” Creviston - President of Mobile Products

Right. So, regarding the first part of your question, the strength we're seeing throughout China right now is largely driven by 5G content, that's the primary driver. I think I spoke last quarter about seeing the need for more like dual signaling capability for example driving additional switching and tenant work. And then I forgot what all three of the categories should be, at the bottom would be the modules in 4G only handset, that's probably the least impactful. Right now, the insights, heavily driven by 5G in mostly content more than units.

James Klein - President of Infrastructure and Defense Products

This is James. I mean certainly we believe we've got great technology and with our GaN and have been doing very well in, in the defense market and we are seeing GaN grow well north of what the market is growing. And so, we also continue to make investments in scale and in reducing our cost, we think are key enablers to that technology to continue to proliferate. As far as stickiness. I mean obviously in defense that markets characterized as you know, long cycles in programs and so, I would consider that a very sticky market. In base station, we are seeing the trends go just about like what we've talked about for the last couple of quarters.

We are seeing massive MIMO systems to deploy and we're also seeing GaN take significant share from LDMOS. And - so both of those are great trends for us and we're capitalizing on those trends and I think it's a good part of how we've been able to turn the business around fairly quickly.

Edward Snyder - Charter Equity Research - Analyst

Excellent. And then for my follow-up. Eric, if I could. Broadcom announced their supply agreement with Apple. I guess it was - I can't remember this week, last week and I know it's probably more of a frame agreement. But they started $15 billion etc. Last time they did this, which was some years ago, the ensuing two or three years that follow that agreement were marked by lack of content for Qorvo in there. So, how does this change the landscape or does it at all in your view, irrespective of if they keep the business or not and what would does that do for the mix of your not just your BAW, but your revenue does it shift more to China up in the upcoming two years or so, or do you have any indication of that?

Robert Bruggeworth - Chief Executive Officer

Well, frankly, it doesn't have any particular impact on our investments today. We are picking our battles and investing in areas where we think the highest when probabilities are. It's a target rich environment right now for integrated modules as well as for discrete components based on BAW technology. As I said, we've got a lot of advancements coming in the technology and well placed, great relationships across the industry and across all base-band manufacturers and tiers. So, the announcement itself and our understanding of what it includes does not impact our current investment plans.

Operator

Our next question comes from Blayne Curtis with Barclays.

Blayne Curtis - Barclays - Analyst

Hey, guys, thanks for taking my question. Just curious on the deals you said it closes in February. Is there anything you can wrap around that in terms of revenue and opex contribution. Then I have a follow-up. Thanks.

Mark Murphy - Chief Financial Officer

Yeah. Blayne, we'll provide more, it's not a material amount of revenue and it's an increase in opex, it's all reflected in our guide and it's dilutive in the near-term.

Blayne Curtis - Barclays - Analyst

Got you. And then, Mark, I know this is preliminary guidance for June. So, just a little confused on the seasonality here. You're seeing all the strength in China, out usually Apple is not stepping down as much in June. I'm just trying to understand what you're baking in for a sequential decline in June?

Mark Murphy - Chief Financial Officer

Blayne. I'm not going to go on in more detail. What we've provided is, our best view given current demand signals and then adjusted for some risk factor. And what is a very uncertain situation at the moment. So, doing our best to provide you at least a directional call that far out. I think the concern as we sit here today is right now, the channel is lean and healthy, the demand signals have not been yet been affected. But we do have the Chinese New Year, we'll wrap up and people take stock of what's going on with this health situation in China and elsewhere. So, I think we're just, we're just being mindful of that and providing the some sort of directional view for you.

But in the June quarter it's still a story of you know what you've heard on the call today about 5G related handset growth, content associated with that growth. Continued Wi-Fi growth, defense strength and infrastructure recovery.

Operator

Our next question comes from Craig Hettenbach with Morgan Stanley.

Craig M Hettenbach - Morgan Stanley - Analyst

Yes. Just first question from Mark, just following-up on the acquisitions, I think you said immaterial to revenue. But you said was it $500 million in terms of total cost for both?

Mark Murphy - Chief Financial Officer

Yes.

Craig M Hettenbach - Morgan Stanley - Analyst

Could you maybe just help frame just kind of the opportunity over the next couple of years in terms of how maybe sizing like that that business in terms of where you see it potentially going?

Mark Murphy - Chief Financial Officer

Yeah, I mean most of the purchase price is associated with the Decawave acquisition. In fact, over two-thirds of it. So, three quarter, over three quarters of it. So, that is a technology investment, as Eric said, it's technology for a market that we think is several billion-dollar market in a number of years and that's going to take time to develop, and it's largely a material revenue and dilutive. The smaller acquisition Custom MMIC is defense bolt-on, and the very easy to integrate right in James as wheelhouse on defense products, advanced technology defense products. We see in the for the part of the March quarter that we have it integrated, it will provide about $3 million of revenue in that quarter. And on a full quarter basis, it will be roughly $5 million or so for the near-term and it's accretive immediately.

Operator

Our next question comes from Raji Gill with Needham & Company.

Rajvindra Gill - Needham & Company - Analyst

Yes, thank you. A question on the RF infrastructure market win, when you expect that to rebound. Any color in terms of what you're seeing with the mobile operators in terms of deploying these base stations across the world, are some regions that are starting to catch up. Other starting to kind of slowdown. Any color there in terms of RF infrastructure will be helpful?

James Klein - President of Infrastructure and Defense Products

Okay. This is James. So, we definitely are seeing deployments gone predominantly today below 6 gigahertz predominantly in China. What's helping us and talk about recovering our businesses, we are seeing massive MIMO continue to take more share, if you want to talk about the share of base stations, and that's a big content, a big for us about 10 times. So, what we would have a macro base station. So, that's driving the recovery. I think the absence of Huawei is obviously a challenge for us in the industry because it's about 50% of the year. But as we said in Bob's prepared remarks. We are ramping with our third customer in that space, I think that will fuel us to recover the business.

Deployments look about own track a little bit of share mix changes in the last quarter, but it appears that there were somewhere in that 400,000 or so of base stations that were deployed last year and it looks like that will grow about 50% this year, so somewhere in that 600,000 base stations deployed. MIMO MIMO content will probably go up maybe 20% last year, 30% or greater here. So positive yes, I think we heard yesterday about some frequency allocations in the US and we hope that that will also spur development to push forward in the United States.

Rajvindra Gill - Needham & Company - Analyst

And I'll follow-up, you talked about GaN taking share against a healthy LDMOS base station. What's driving that transition. What's the catalyst for that?

James Klein - President of Infrastructure and Defense Products

Yeah, it's three-fold. One is the move to higher frequencies and GaNs before performance advantage at higher frequencies, also broader bandwidth associated with 5G and again GaN has a better ability to deal with those higher or broader frequency levels and then in some cases just higher output power. But in general, the technologies is very well suited to move in these directions that we've talked about before of higher frequency and broader bandwidth.

Operator

Our next question comes from, excuse me, Srini Pajjuri with SMBC Nikko Securities.

Srini Pajjuri - SMBC Nikko Securities - Analyst

Thank you. A couple of clarifications. Mark, maybe you can talk about how many 10% customers you had in the quarter. And also, if you could give us what percent of the mix in mobile was China in the quarter?

Mark Murphy - Chief Financial Officer

Yes. So, we had 2%, 10% customers in the quarter. And I don't breakout by region our sales by quarter.

Srini Pajjuri - SMBC Nikko Securities - Analyst

Got it. And then is it fair to say that Huawei still kind of minimal on the mobile side or did it grow in the quarter?

Mark Murphy - Chief Financial Officer

Yeah. Huawei was one of the 10% customers actually and it was stronger than we expected along with along with the other Asia-based handset producers. I said on the last call that we expected Huawei to be about 5% in the second half. They were larger than that in the December quarter. So, that statement is still correct. It's just that the, obviously the weighting is not uniform across the second half. So, we expect them to be about a 5% customers. Second half obviously the largest portion of that in the December quarter. I think it's important to note here that we are seeing broad based strength related to 5G across the Asia handset producers and importantly across all chipset producers. And I think the March guide drives home that point.

Operator

And our next question comes from Vivek Arya with Bank of America Securities.

Vivek Arya - Bank of America Securities - Analyst

Thanks for taking my questions and congratulations on the strong results. First one, I'm curious what does the shape of the 5G handset rollout look this year, is it kind of more balanced first half, second half. Is it more 60%, 70% back half weighted. When I look at the $300 million or so market size. It's much higher than what others have that's closer to $200 million. So, I'm just curious how you are seeing the 5G rollout. What you have seen so far and what do you think the shape of the year looks like for the market?

Mark Murphy - Chief Financial Officer

I mean I would say it's per uniform across the year. Obviously, we're getting out to a very strong start concerns that Mark had about Coronavirus and so forth, might impact demand and supply, we'll see how it goes. But I wouldn't have any other more specific comment on profile.

Vivek Arya - Bank of America Securities - Analyst

And for my follow-up. There has been some concern about the pace of wireless deployments, we heard that from Xilinx and Texas Instruments. I'm curious if you had noticed any of those slowdowns and I apologize if you answered this already. But what are you baking in for your base station sales going into the March quarter? Thank you.

Mark Murphy - Chief Financial Officer

Yeah, I mean what's really been driving our recovery is again massive MIMO. For us as we get that shift, we get about a 10 times content lift. So, I think if we were only in macro or only looking at a macro view, I would say, yes, we would see the deployments going slower in the business being slower but because of content pickups. On top of us now being, we are able to compete in the power amplifier slots with GaN. I think that's what's really fueling maybe a bit difference with us and some of the other folks in the business.

Now, that said, we are still way off our historical highs from where we had been a year ago or so. So, a long way to go before we recover from the restrictions on being able to ship to Huawei, which again, I'll restate is about 50% of the market at this point.

Operator

That concludes today's question-and-answer session. At this time, I will turn the conference back to management for any additional or closing remarks.

Douglas DeLieto - Vice President, Investor Relations

Thanks for joining our call. Tonight. We hope to see many of you at our upcoming investor events and we look forward to speaking with you on our fourth quarter earnings call. Thanks again and have a good night.

Operator

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