Maxim Integrated Products (MXIM) Q3 2019 Earnings Call Transcript

Maxim Integrated Products (MXIM)
Q3 2019 Earnings Call
April 30, 2019 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Maxim Integrated third-quarter of fiscal 2019 conference call. [Operator instructions] As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Kathy Ta, vice president of investor relations. Please go ahead, Kathy.

Kathy Ta -- Vice President of Investor Relations

Thank you, Jonathan. Welcome everyone to Maxim Integrated's fiscal third-quarter 2019 earnings conference call. Joining me on the call today are Chief Executive Officer Tunc Doluca and Chief Financial Officer Bruce Kiddoo. As part of our usual process, we have posted a supplemental financial presentation to our external Investor Relations website.

The information in this presentation accompanies the financial disclosures in our earnings press release and on this conference call. During today's call, we will be making some forward-looking statements. In light of the Private Securities Litigation Reform Act, I'd like to remind you that these statements must be considered in conjunction with the cautionary warnings that appear in our SEC filings. Investors are cautioned that all forward-looking statements in this call involve risks and uncertainty and that future events may differ materially from the statements made.

For additional information, please refer to the company's Securities and Exchange Commission filings, which are posted on our website. Now I'll turn the call over to Tunc.

Tunc Doluca -- Chief Executive Officer

Thank you, Kathy. Good afternoon to all our participants, and thank you for joining us today. We appreciate your interest in Maxim Integrated. Our March quarter results met our expectations and end-market demand appears to have stabilized.

In the quarter, we reduced shipments to our distribution partners to reduce inventory days in the channel. Looking ahead to the June quarter, we expect the return to seasonality in Industrial and Automotive with both end markets trending up sequentially from the soft March quarter. Our profitability remains at industry-leading levels in the cycle due to our flexible manufacturing structure and overall business model. We are on track to return 125% or more of free cash flow to shareholders this fiscal year, with increased share buyback and industry-leading dividend.

Let me now discuss March quarter results and current quarter outlook starting with automotive. In the March quarter, our automotive business was up 5% from the same quarter last year, despite a year-over-year decline in global car production. This impacted our infotainment and auto body electronics businesses and was offset by strength in battery management system products for electric vehicles and growth in driver assistance revenue. The strong BMS product revenue growth was primarily from growth in electric vehicle production and secondarily from Maxim share gains.

In the June quarter, we expect automotive to be up sequentially. We see continued strong demand for battery management systems, particularly in China. This is expected to be offset by softer infotainment revenue, which is correlated with overall car production. We continue to believe in the long-term secular growth prospects for automotive business, with growth opportunities in battery management systems, driver assistance products and infotainment.

All of these are expected to grow faster than overall car production due to higher growth of electric cars and higher content per car in driver assistance and infotainment. Let me next turn to the industrial market. In the March quarter, industrial was down 18% from the same quarter last year, reflecting the soft demand environment. Within distribution, global resales were seasonal.

Bruce will provide more detailed commentary on the dynamics of our distribution business right after me. In the June quarter, we expect industrial to be strongly up sequentially, led by content growth in factory automation and in broad-based industrial products. In factory automation, we are focused on power management products in the areas of interface and communications that deliver intelligence to the factory edge. Let me next discuss communications and data center.

In the March quarter, comms and data center was down 22% from the same quarter last year. As expected, we saw lower demand for 100G laser driver products for optical modules used in hyperscale infra data center applications. Year-on-year revenues also declined in a broad base of building block products. Our customers are indicating that the excess inventory of 100G laser drivers and modules will burn off by the second half of calendar 2019.

In the June quarter, we anticipate comms and data center revenue to be down sequentially with continued softness in 100G laser driver shipments and in a broad base of building block products. However, we believe in the long-term growth opportunities in the data center market with our market-leading 100G laser drivers, strong pipeline of higher data rate optical transceiver products and with high density, highly integrated power management products for servers. Additionally, we do have optical and power management products that serve the early 5G infrastructure market, and we have started shipments of these products. We expect these products to ramp significantly in the next fiscal year.

Finally, let me turn to consumer. In the March quarter, consumer was down 27% from the same quarter last year with weakness in smartphones and seasonal softness in our broad-based business in tablets, wearables and peripherals. In the June quarter, we expect Consumer to be flat sequentially due to growth in our broad-based consumer business in gaming, peripherals, wearables and tablets, offset by lower smartphone business. To summarize, we have built Maxim to be successful in the current environment and to position the company for the next market upturn.

We are growing our content and new design wins in long product life cycle end market, such as automotive and industrial. Our analog business model and flexible manufacturing strategy ensured consistent company profitability and stability. All of this results in strong, predictable free cash flow, all of which we return to shareholders. With that, I'll now turn the call over to Bruce.

Bruce Kiddoo -- Chief Financial Officer

Thanks, Tunc. Revenue for Q3 was $542 million, in line with expectations, but down 6% sequentially and down 16% from the same quarter a year ago. While this is clearly a period of soft demand, we are built to perform in any environment. Our trailing 12-month free cash flow, excluding our one-time tax payment in Q4 FY '18, grew 7% from last year and was 38% of trailing 12-month revenue.

We are executing on our plan to return 125% or more of free cash flow to shareholders in the current fiscal year. Our revenue mix by major markets in Q3 was approximately 28% industrial, 26% consumer, 25% automotive, 18% communications and data center and 3% computing. Our industrial and automotive businesses comprised 53% of our revenue in the quarter, which is an all-time high since I have been at Maxim. Turning to the distribution channel, distribution comprised 49% of Maxim's revenue in the March quarter.

We ended Q3 with 64 days of inventory in the distribution channel, down from 68 days in the prior quarter. Channel inventory dollars decreased by 8% due to our management of shipments into distribution partners. Resales were down 11% from the same quarter a year ago, but were seasonal across most geographies. We continue to closely manage our supply chain, our inventory in the distribution channel and our distributors' performance given the uncertainties in the industry.

We remain committed to bring down our days of channel inventory to our target of 60 days or less. Turning to the P&L, Maxim's gross margin, excluding special items, was 63.8%, down 2.1 percentage points from the prior quarter, with the decrease driven by lower revenue and higher inventory reserves in Q3. Operating expenses, excluding special items, were $181 million, down 4% from the prior quarter and below our guidance, reflecting tight cost controls. Q3 GAAP operating income, excluding special items, was $165 million.

Operating margin was 30% of revenue, down from the prior quarter due to the lower gross margin. Q3 GAAP tax rate, excluding special items, was 14%. GAAP earnings per share, excluding special items, was $0.52, in line with expectations, but down $0.29 -- 29% from the same quarter a year ago. Turning to the balance sheet and cash flow, overall, total cash, cash equivalents and short-term investments decreased by $62 million in the third quarter to $1.9 billion due to returning 125% of free cash flow in FY '19.

Q3 inventory days ended at 126, down three days from Q2 and inventory dollars were down 2% from the prior quarter. Capital expenditures were $21 million in the quarter. Adjusted trailing 12 months free cash flow was $899 million or 38% of revenue, which is up 7% over the same quarter last year. Our free cash flow yield is 5.5% at yesterday's closing stock price.

Our free cash flow per share was $3.25. For capital return, share repurchases totaled $117 million in Q3, as we bought back approximately 2.2 million shares. Dividends totaled $126 million in the quarter or $0.46 per share. Based on yesterday's closing stock price, our dividend yield is 3.1%.

Our beginning Q4 backlog was $399 million. Based on this beginning backlog and expected turns, we forecast Q4 revenue of $540 million to $580 million. This is the result of continued content growth in automotive and sequential growth in our factory automation and broad-based businesses in industrial. Q4 gross margin, excluding special items, is forecasted at 64% to 67%, up significantly from Q3 with higher revenue, lower inventory reserves and improved product mix.

Q4 operating expenses, excluding special items, are expected to be in the low 180s due to tight cost controls and response to the soft environment. Our tax rate for Q4, excluding special items, is expected to be 14%, flat with the prior quarter. For Q4 GAAP earnings per share, excluding special items, we expect a range of $0.54 to $0.60. For FY '19, we expect capital expenditures to be just above our targeted range of 1% to 3% of revenue due to lower revenue and facility upgrades at our one internal fab.

We are on track to return 125% or more of free cash flow in fiscal 2019. Looking forward to fiscal '20, we plan to continue to return 125% of free cash flow to investors. In summary, we expect a return to seasonal increases in Q4 revenue in Industrial led by factory automation and continued content growth in automotive led by battery management systems. While industry conditions remain soft, we believe automotive, industrial and data center are high-quality, long-term secular growth drivers for Maxim.

Our flexible manufacturing strategy enables us to maintain high profitability, and we will continue to tightly control operating and capital expenses. These factors result in high-quality earnings and strong free cash flow, which will support our plans to return 125% of cash to shareholders. As a result of the increased buyback during the cycle, we will exit this period with greater earnings power. With that, I'll turn the call back over to Kathy.

Kathy Ta -- Vice President of Investor Relations

Thanks, Bruce. That concludes our prepared remarks, and we will now open the call for questions. [Operator instructions] Jonathan, could we please have our first question? 

Questions and Answers:

Operator

Certainly. Our first question comes from the line of Harlan Sur from JP Morgan.

Harlan Sur -- J.P. Morgan -- Analyst

Congratulations on the strong execution. On the outlook for the strong growth in Industrial here in the June quarter, I always view this as somewhat of a good proxy for sort of global demand and manufacturing trends. I think you gave us some color. Factory automation strong, strong catalog business servicing the SNB customers.

Is the growth that you're seeing broad-based across all geographies on a sequential basis, including China? And then just given your visibility, do you anticipate a September quarter driving kind of a normal seasonal profile, which I think is sort of flattish plus or minus?

Bruce Kiddoo -- Chief Financial Officer

Yes. So Harlan, this is Bruce. So when we think about our industrial business and guiding that up strongly, I think it's a couple of things. We have seen the strength in our factory automation, but we also saw nice broad-based kind of return to seasonality in our distribution business.

In our distribution business, the largest component of that is industrial. And so when we look there, both China and Europe were seasonal on a kind of quarter-over-quarter basis, albeit on a lower base. And as we look into the Q4 quarter, we see that continued seasonality in those geographies. Similar story seasonality for Japan.

I would say the one area we have seen some below seasonality was in Americas in our third quarter. Speaking to September, we're, obviously, giving guidance for one quarter and even additionally in this environment, right, we're kind of giving guidance based of what we can see in front of us, what is sort of the backlog and the trends that we have immediately before. And certainly, we don't have the visibility to talk about September.

Operator

Our next question comes from the line of Ross Seymore from Deutsche Bank.

Ross Seymore -- Deutsche Bank -- Analyst

Congrats on the solid results. Just want to talk a little bit about the automotive side of things. You gave some color about what was happening in ADAS and BMS and that was very helpful. As you think about the SAAR side of things, what are your customers telling you about that side of the business? And what that might impact, albeit it turned to a tailwind in the back half of the year? And is there any competitive dynamics changing within BMS as some new companies have entered that market and are getting some traction from what we can tell?

Tunc Doluca -- Chief Executive Officer

Ross, OK, I'll like that. There were a few questions in that one combined question, but I think we have time to answer them. So in terms of what we're seeing in the automotive market, in general, I mean, if you look at market data for car production, last year or 2018 calendar year was down slightly about 1% or so. This year, 2019, car production is about flat is what the markets are saying.

We don't really get too much more detail from the Tier 1s, who are the ones that we really talk to a lot. So we usually go by what the market numbers are from marketing companies, so -- and a lot of that 2019 calendar year is expecting growth in the second half. So that's what we're seeing from a market standpoint. In terms of the competitive environment, I mean, automotive is a good area for growth.

We're not the only company that sees that. There are other companies, obviously, that want to grab as much our share as they can. The competitive dynamics haven't really changed. It's kind of always been that way.

And in the BMS market, which is the one that you talked about, we've done quite well. We've done well because electric vehicles have been growing faster, obviously, than car production. And our products are very well-received. So in the period last year, we think that we've also increased our share in the market.

Well, that doesn't say that there are no competitors. They are out there. We have to keep ahead of them. And if you look at why our customers selecting our products because our products have better ASIL or ASIL D which is the top safety integrity rating performance and a very robust communications features in them.

So that's why we've been doing well in the market. But as I said, there are competitors. We have to go through an end-to-end combat to win the designs. The good news then we have is that we've got really great success in China, which is where actually the biggest growth is recently and that helps, where we've had design wins in pretty much all geographies around the world.

So that kind of talks to the strength of our product line and our technology.

Operator

Our next question comes from the line of Ambrish Srivastava from BMO Capital Markets.

Ambrish Srivastava -- BMO Capital Markets -- Analyst

Bruce and Tunc, you guys have brought down the cost structure a fair bit over the last several quarters. How should we be thinking about opex, as we think through fiscal '20?

Bruce Kiddoo -- Chief Financial Officer

Sure. As we said, right, we brought it down $7 million this quarter. It's actually down, if you kind of look at the guidance we gave for Q4 in the low-180s, we'll probably be down 4% year over year, roughly. So I think we have done a good job responding to the current soft environment.

I think we will continue to be diligent and have price controls around spending until we're confident in kind of the growth, kind of, returning to our industry. Our model has always been that we'll grow opex at about half the rate of revenue on a trailing 12-month basis. So even if we have a forecast for a strong second half of the year, for example, that doesn't necessarily mean we're going to ramp up opex ahead of that, right? We'll continue to be cautious and make sure we've actually achieve the revenue growth before we ramp opex.

Operator

Our next question comes from the line of Vivek Arya from Bank of America Merrill Lynch.

Vivek Arya -- Bank of America Merrill Lynch -- Analyst

Tunc or Bruce, you're sounding more optimistic about demand recovery and then return to seasonal growth versus what we heard from Texas Instruments or NXP. So I just wanted to go back to that question about June quarter outlook. What are you seeing that is so different than kind of the more subdued tone we heard from some of your peers is, is there a big difference? And is it more company-specific design wins? Is there anything else that would create a difference in the June quarter outlook between yourself and some of your peers?

Tunc Doluca -- Chief Executive Officer

Yes. So I'll take that one and Bruce can add, if he wants. But one of the areas where we might be seeing a difference is in the industrial space. When we look at our guidance versus some others, I think, our guidance is probably a little bit better than others.

First of all, there's no doubt that the whole industrial business is impacted by the slower environment. This is in line with other companies, so there's nothing special there. I think maybe the difference is that we have seen some signs of stabilization in resales returning to seasonal trends is a good indicator there, and we're also seeing that continuing into Q4. And the inventory in the channel is -- might be less of a headwind for us because we've took it down in Q3, and we've also had inventory dollars decline in this thesis now for two quarters in a row.

So we're kind of improving over off of a lower base, and it is possible that we took our medicine earlier. I mean, if you think about it, the industrial revenue declined 18% year over year in the March quarter. So that's a pretty big decline. So part of it might be that we've kind of seen a decline earlier than other suppliers, and now it's looking better off of a low base.

I mean, that's the explanation I've got on the industrial side. On the automotive side, we're pretty much saying that the growth is more muted than our original forecast. Remember, our long-term forecast was low-teens growth for automotive and we're definitely below that and that gets impacted quite a bit in our infotainment business. And I don't think that is significantly different than other companies.

So the biggest thesis is likely in the industrial space. And finally, if you look at our consumer business, it's kind of more balanced now with more exposure to a broader base of markets. So that's kind of helping also keeping at least on a quarter-over-quarter basis it's not falling, which kind of helps as well. So that's kind of the observations that we have versus other companies.

Operator

Our next question comes from the line of Craig Hettenbach from Morgan Stanley.

Craig Hettenbach -- Morgan Stanley -- Analyst

In the automotive market, clearly, there's some impact from weaker production like you said in areas like infotainment. But just from your discussions with Tier 1 suppliers, do have a sense in terms of how they're managing and OEMs are managing inventory in this environment? And when you think they'll get to a level where you'd see actually some snapback from an inventory perspective in autos?

Tunc Doluca -- Chief Executive Officer

Yes. I'll take that one, too. I mean, we do, obviously, talk to Tier 1s, but we don't have -- I have to say that we don't have a lot of access to what their inventory levels are. We kind of know how they pull product from Maxim.

But in terms of what they have in their -- with or in their finished goods of ECUs, we don't really have good visibility for. So it is really hard for us to answer that question.

Craig Hettenbach -- Morgan Stanley -- Analyst

OK. Maybe just a different approach in terms of just the last quarter to how they are pulling inventory? And if you're seeing any shifts, is if they kind of work through some of the weakness?

Tunc Doluca -- Chief Executive Officer

The only thing we can say is, we basically said that our automotive business would be up this quarter, and it's not really up strongly. So I'd say that maybe that's an indication that they are using our products, but it's still feels like until if you look at market data until the second half comes, it's really hard to say over the year.

Bruce Kiddoo -- Chief Financial Officer

Yes. And Craig, so this is Bruce just to add a little more color and really just to reiterate what Tunc said in his opening remarks. When we look at automotive business in the March quarter, it was up roughly 5% year over year. We continue to see very strong growth in both our battery management systems and in our driver assistance serial link products.

And so as we know, that's a content story, which has been somewhat insulated from the overall market demand. That said, our infotainment business would still have content growth story as well long term, but it's larger, more mature, more correlated with the overall market, while that was done year over year in the March quarter. So we have seen that impact, but we do have the content story, which, again, makes it a little bit harder for us to parse out exactly what's the kind of impact is of global demand on auto source.

Tunc Doluca -- Chief Executive Officer

Yes. And just to add to that, I mean, as Bruce said, infotainment was down in the March quarter year over year. And on a year-over-year basis, it looks like it probably will be done this June quarter as well.

Operator

Our next question comes from the line of Tore Svanberg from Stifel.

Tore Svanberg -- Stifel Financial Corp -- Analyst

Would you be able to comment on linearity of orders? And where there any variations geographically?

Bruce Kiddoo -- Chief Financial Officer

So Tore, this is Bruce. I think our business because it's so broad based and we shipped 900 million units, our linearity is pretty predictable. We were not a company that has back-end loaded. We've never been that -- have that linearity.

And from our ship to basis, still the majority of our products ships to Asia. And so from that point of view how we can track linearity, there wasn't any real change from a geographic point of view, but that's primarily just influenced because of where they ship to mainly goes to Asia.

Tunc Doluca -- Chief Executive Officer

Tore, where you asking the linearity of the orders or of the shipments?

Tore Svanberg -- Stifel Financial Corp -- Analyst

Yes. I was asking about the linearity of orders throughout the quarter?

Tunc Doluca -- Chief Executive Officer

Throughout Q3?

Bruce Kiddoo -- Chief Financial Officer

Yes. So there I would say I think we saw some good, some early strength because we had very, very low turns in the December quarter, and I think people just wanted to kind of -- so we had some nice turns early on and some good booking. And then I would say it stabilized throughout the second half of the quarter.

Operator

Our next question comes from the line of Chris Caso from Raymond James.

Chris Caso -- Raymond James -- Analyst

This question is a follow-up on some of the prepared comments on inventory, particularly in the distribution channel. And I guess first, how long do you expect to get distribution down to around your 60-day target? Additionally, how much of a drag was that on revenue for the March quarter? And how much are you contemplating in the June quarter guidance?

Bruce Kiddoo -- Chief Financial Officer

Yes. So our goal is 60. And as you know, days of inventory are two big factors there. One is the amount of inventory that's in the channel, how much do we shipping and then how much are resales, how much are the output.

Obviously, we control what we shipping. And based on what the forecast is for resales from our distribution partners, our goal is to bring down that current 64 days down to 60. Because of the very difficult, I mean, it's difficult for us to forecast to a certain extent our business. It's much harder to forecast resales through the distribution partners.

Obviously, we get forecast, but we don't have the same amount of details like we have here like backlog and other items that we can manage that with. So it's very hard for us to forecast that. And when you look at that, in the four-day decline, and with the combination of both lower shipments and obviously some improvement in resale quarter over quarter. So you can't say exactly how much benefit.

Clearly though, as Tunc said, we did sort of kind of take our medicine in the March quarter because we do want to make sure kind of coming out of this slowdown, we're well-positioned from an inventory point of view and we don't have some extended drag on our business as the overall industry ramps up.

Chris Caso -- Raymond James -- Analyst

I'm sorry, are able to quantify that in terms of how much -- what's the impact on at least March quarter revenue from the difference between sell-in and sell-through?

Bruce Kiddoo -- Chief Financial Officer

No.

Tunc Doluca -- Chief Executive Officer

Yes. Chris, you can probably calculate it yourself. Distribution is what about 40%, 45% of our business?

Chris Caso -- Raymond James -- Analyst

Yes, 49%.

Tunc Doluca -- Chief Executive Officer

Four days. We don't have it in front of us. We kind of hide the numbers. You can probably calculate it.

Operator

Our next question comes from the line of Srini Pajjuri from Macquarie Securities.

Srini Pajjuri -- Macquarie Group -- Analyst

Tunc, on the data center business, the inventory correction that you mentioned, it seems to be taking a little longer than at least I was expecting. Could you give us a bit more color as to what's going on there? And then I'm just curious as to are there any market share dynamics at play as well here?

Tunc Doluca -- Chief Executive Officer

Well, honestly, it's taking longer than I expected, also. So it doesn't feel to us like there's any market share that's of issue here. The designs that we won, we're maintaining. Most of the customers are not really that interested in redesigning any way their systems for this generation of products.

But I think, especially driven probably by concerns last year over shortages of components and so on, it seems like the end customers, the hyperscale customers and partially the module markers were overpurchasing and this is taking longer for that to burn off in the supply chain. We are getting indications from customers that, that will burn off and shipments will resume most likely in the second half of the calendar year, but I wouldn't read anything more than that into these shipments resuming for those products and revenues returning.

Operator

Our next question comes from the line of C.J. Muse from Evercore.

C.J. Muse -- Evercore ISI -- Analyst

I guess a question on gross margins. I think you said that inventory reserves led to the modest miss from March. Can you provide some clarity on that? And then as you think about going into June and September and beyond, and I guess considering a desire to work down just the inventory as well as some of the mix issues that you've outlined both good and bad across your different segments, how should we think about the outlook to gross margins into a recovery?

Bruce Kiddoo -- Chief Financial Officer

Yes. So when we look at the March quarter, and you're right, we did kind of come about a point below where we had expected to come in. And that was inventory reserves and just that's the noncash charge, which is basically equal to. We look at sort of what our forecast is for one to two years by product and then we compare that to the inventory we have and to the extent we have more inventory than we have demand that drives an inventory reserve.

As you might expect a little bit from a psychology of forecasting, when you are in a slowdown, people kind of bring down the long-term forecast. We're never -- no one is very good at forecasting inflection points up or down. And so when that happens, we bring down the long-term forecast and that generally results in an inventory reserve charts. Now as the business comes back and we ship to the extent that we ship products that we previously reserve for, those would come in at 100% gross margin.

But we have a consistent methodology. We follow that throughout the cycle. And in this situation, we ended up with about a point 100 bps impact due to that higher-than-normal inventor reserve. As we think about going forward, we're highly confident -- I'm confident that gross margin will return back into our target range of 67% to 70%.

Obviously, we're forecasting to get back up to about 65.5% at the midpoint in the June quarter as that kind of -- that's the benefit of both return to normal for inventory reserves and a little bit better mix with Industrial strongly up. Assuming revenue continues to improve, that will improve utilization in our loan remaining fab and our back-end test facilities, and we'll see, we lost a point in the March quarter for that as well. So that gets you back up. And I think when we get over kind of roughly, if you look historically when we get over $600 million, we should be back in our target range for gross margin.

So going forward, all the same tailwinds exist out there for us kind of maximizing utilization at our remaining fab up in Oregon, the favorable pricing environment, the mix of business as we grow industrial, as we grow our distribution business. All of those will provide tailwinds for gross margin long term, and we're still very confident that, that's the gross margin we'll continue to expand long term within our target range.

Operator

[Operator instructions] Our next question comes from the line of William Stein from SunTrust.

William Stein -- SunTrust Financial Corp. -- Analyst

I'm hoping you can talk about trends in the comps end market if you exclude the 100-gig optical both in the guided quarter? And as you look out over the next couple of quarters, what are you expecting that end market, please?

Tunc Doluca -- Chief Executive Officer

So if you exclude the 100G basically data center market, if you just look at comps and talk about infrastructure comps, which I believe you're asking. Obviously, there are opportunities there for us. In the prepared remarks I talked a little bit of them. This new generation of comps infrastructure or 5G or 4G plus whatever you call it, there are obviously opportunities there for Maxim.

Those opportunities are in some optical products we have for base station backlog. We have power management products to go both in the base fan units, as well as the remote radio units and a whole bunch of other general purpose products that end up in this market. So we received the question about what is Maxim's exposure and opportunity in 5G. It definitely is an opportunity for us, but it is not as large as some of our competitors, which have single chain products in that space as well.

So we see that as an opportunity. In general, if you look at our revenue in the last couple of quarters into the comp's infrastructure, it's been pretty weak. It's mostly general purpose products that are in the older-type base station parts. So the broad base of general purpose products we're selling have not been selling that well.

But in terms of the 5G opportunity, it looks like we just beginning to ramp the products that I mentioned and we expect those to start growing in the second half of calendar-year '19.

Operator

Our next question comes from the line of Mitch Steves from RBC Capital Markets.

Mitch Steves -- RBC Capital Markets -- Analyst

I just wanted to shift the focus a bit to the consumer segment. We're getting some differentiated data points with the markets coming back, but then you guys printed kind of a lighter than expected, I guess, consumer business, but it sounded that's improved. So maybe you can provide us a more granular update on what's happening on the smartphone side of the business? And what you guys expect the second half of the full calendar year?

Tunc Doluca -- Chief Executive Officer

So let me take that one. So if you look at our consumer business, just to give you some color, about half of our consumer business is in smartphones and the other half is mix of hearables, wearables and tablets and gaming, all kinds of other types of products. So from our viewpoint, we have been executing a strategy to increase the diversity of the revenue base in the consumer business, and we have been doing that successfully so that we've grown the piece that's the diverse part of that revenue. Going forward, that revenue has a different seasonality than our smartphone business.

So what we said about this quarter being flat was basically because we have weakness in smartphones and we see seasonality in the other markets beginning to come back, which is the broad-based piece offsetting each other. Longer term, we have in our largest customer, they are basically selling fewer phones and we have less content in those phones. So that's the headwind that we have on the smartphone side. And we continue to grow the other piece of the business, which is more diversified and more stable.

So that's kind of the dynamics. So long term in consumer, we expect to be flat or maybe slightly up a few percentage points, but it's not going to be a big growth area for the company most likely.

Operator

Our next question comes from the line of Harlan Sur from JPMorgan.

Harlan Sur -- J.P. Morgan -- Analyst

And actually, this is a follow-up question to the last question on consumer because for the last couple of years, as you mentioned, with the diversification away from smartphones, your September quarter actually has been profiling more like a traditional consumer business as you gear up sort of for the seasonally stronger second half, meaning that it's been growing sequentially. I think this year, you've got your flagship gaming customer ramping a new platform with your power management products, you've got new wearables, tablets and so on. And so is this a fair assessment that sort of consumer normal seasonal now for you guys is probably up sequentially in the September quarter?

Bruce Kiddoo -- Chief Financial Officer

Yes. Harlan, so this is Bruce. I mean certainly, we've talked and Tunc talked about it as well. I mean our seasonality is changing such that we're now going to follow probably a more traditional consumer seasonality, which is generally stronger in the September quarter.

Historically, I have been doing this job for a while. Whenever I get in trouble, whenever I try to forecast consumer out more than a quarter. So I'm not going to do that, but you're accurate in that. The normal seasonality now is sort of stronger in that September quarter.

And then the other dynamic that does occur is to the extent that within this broad base of consumer, there are product launches out there whether, as you said and we called out, in the June quarter, for example, we are seeing some upside in the gaming area. We see upsides in tablets as there are certain product launches there, same thing with wearable devices. So you have that kind of a normal consumer seasonality and then you have sort of on top of that product introductions by our customers.

Operator

And I'm not showing any further questions in the queue at this time. I'd like to hand the program back to you for any further remarks.

Kathy Ta -- Vice President of Investor Relations

OK. Thank you, Jonathan. That does conclude today's conference call. Thank you for your participation and for your interest in Maxim.

Operator

[Operator signoff]

Duration: 46 minutes

Call Participants:

Kathy Ta -- Vice President of Investor Relations

Tunc Doluca -- Chief Executive Officer

Bruce Kiddoo -- Chief Financial Officer

Harlan Sur -- J.P. Morgan -- Analyst

Ross Seymore -- Deutsche Bank -- Analyst

Ambrish Srivastava -- BMO Capital Markets -- Analyst

Vivek Arya -- Bank of America Merrill Lynch -- Analyst

Craig Hettenbach -- Morgan Stanley -- Analyst

Tore Svanberg -- Stifel Financial Corp -- Analyst

Chris Caso -- Raymond James -- Analyst

Srini Pajjuri -- Macquarie Group -- Analyst

C.J. Muse -- Evercore ISI -- Analyst

William Stein -- SunTrust Financial Corp. -- Analyst

Mitch Steves -- RBC Capital Markets -- Analyst

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