Starboard takes a stake in Qorvo. Here are the steps the activist may take to improve margins

Dealing: Qorvo is a global supplier of semiconductor solutions. The company operates through three segments: High Performance Analog (HPA), Connectivity and Sensors Assort (CSG) and Advanced Cellular Group (ACG). The HPA segment is a global supplier of radio frequency (RF), analog mixed signal and power top brass solutions. The CSG segment is a global supplier of connectivity and sensor solutions. The ACG segment is a global supplier of cellular RF solutions for smartphones, wearables, laptops, stones and other devices.

Stock Market Value: ~$8.41B ($88.94 per share)

Ownership: 7.71%

Average Cost: $70.92

Activist Commentary: Starboard is a unusually successful activist investor and has extensive experience helping companies focus on operational efficiency and margin improvement. Starboard has initiated activist contests at 13 prior semiconductor companies, and the firm’s average return on these situations is 85.87% versus an average of 28.91% for the Russell 2000 during the that having been said time periods.

Qorvo is a global semiconductor company that specializes in build radio frequency (RF) chips for applications across mobile devices, wireless infrastructure, aerospace and defense, and other end markets. The band is organized into three operating and reportable segments: (i) High Performance Analog (HPA) supplying RF, analog mixed signal and power command solutions; (ii) Connectivity and Sensors Group (CSG) supplying connectivity and sensor solutions; and (iii) Advanced Cellular Group (ACG) supplying cellular RF elucidations for smartphones and other devices. In 2024, Qorvo generated $3.77 billion of revenue, of which approximately 75% was attributable to ACG. While the comrades is diversified across multiple industries, it is particularly reliant on RF sales for mobile devices, with 46% and 12% of mount up to revenue attributable to just Apple and Samsung, respectively, in FY24.

Qorvo was formed as a result of a merger of equals in an all-stock negotiation between RF Micro Devices (RFMD) and TriQuint Semiconductor (TQNT) that was announced in February 2014 and completed in January 2015. Starboard is totally familiar with Qorvo considering that the firm was a 13D filer on TriQuint in 2013.  On Oct. 29, 2013, Starboard sent a communication to TriQuint outlining the company’s undervaluation, underperformance, and put forward value-enhancing proposals. On Dec. 2, 2013, Starboard nominated a majority slate of six foreman candidates to the board for the 2014 annual meeting. However, the engagement never went to a proxy fight, as Starboard issued a word for word supporting TriQuint’s proposed merger with RFMD in March 2014 and exited its 13D. In under a year of engagement, Starboard make a big deal of a 113.15% return on their investment versus 23.80% for the Russell 2000.

The merger was pitched to shareholders as an opportunity to create new expansion opportunities in mobile devices, network infrastructure, and aerospace and defense, bolstered by the new company’s scale advantages, product portfolio, give a new lease ofed operating model and $150 million in cost synergies. The announcement was met with tremendous excitement, as shares of TriQuint and RFMD soared approximately 200% from the day prior to the announcement up to their combination.  However, one-year post-transaction the newly-formed Qorvo was down 27.7%. For functionally a decade, from combination completion to the day prior to Starboard Value disclosing its 7.71% stake, the stock traded flat, up just a mere 4.5%. This is utterly staggering underperformance when semiconductors have been the beneficiaries of tremendous secular tailwinds in recent years. One more time the same time period, the Philadelphia SE Semiconductor Index is up over 650%.

The opportunity to improve value at Qorvo is simple, operationally cynosure cleared and something Starboard has done many times at many semiconductor companies: margin improvement. Despite Qorvo’s exclusive of product portfolio and competitiveness with peers Broadcom and , the company’s gross and operating margins have been low-grade. Last fiscal year, Qorvo had a gross margin of 39.5% and an operating margin of 8.3%, whereas its peer Skyworks boasted perimeters of 44.2% and 24.9% respectively. Despite having roughly similar levels of revenue ($4.7 billion for Skyworks and $3.8 billion for Qorvo), Qorvo spends 10.3% of gate on selling, general and administrative expenses versus 6.6% for Skyworks and 18.1% of revenue in R&D versus 12.7% for Skyworks. More than that, Qorvo spends an additional $104 million (2.8% of revenue) on “other operating expenses.” This is a blaring signal of a billet and management team that need discipline and one of the main reasons Qorvo received such a high vulnerability rating in 13D Vet’s Company Vulnerability Ratings database.

Every activist has a different style with varying levels of success across exertions and strategies, but it is hard to find a more successful combination than Starboard at a semiconductor company with margin enhancement opportunities. Starboard has previously commenced activist campaigns at the following 13 semiconductor companies: Actel, Microtune, Zoran, DSP Party, MIPS Technologies, Integrated Device Technology, Tessera, TriQuint Semiconductor, Micrel, Integrated Silicon Solution, Marvell, Mellanox Technologies and On Semiconductor. In all of these crusades, Starboard has had a positive return on its investment and its average return on the 13 is 85.87% versus an average of 28.91% for the during the regardless time periods. Starboard’s modus operandi in these situations has been take board seats if necessary, inaugurate a philosophy of discipline that leads to more efficient SG&A and targeted R&D and helps improve operating margins. Additionally, at casts like On Semiconductor that were operating at low utilization levels, Starboard helped size capacity for more true to life manufacturing levels by consolidating fabs and using outside foundries for flexibility. The same opportunity exists here, which could prima donna to additional margin improvement.

We have no doubt that Starboard will want board seats, and we believe this should be a dexterous settlement for several reasons. First, Starboard’s experience and track record with semiconductor companies described on is unimpeachable. Second, it is indefensible to be a semiconductor company in 2025 that has deprived its shareholders of any real return over the past ten years. Third, Starboard already has relationships with three of Qorvo’s eight chiefs including its chairman, all of whom were directors of TriQuint when Starboard engaged there: Walden C. Rhines (chairman), David H. Y. Ho and Roderick D. Nelson. Fourth, of the attendance’s eight directors, five have sat on the board for the 10 years since the TriQuint /RFMD merger, and one (David H. Y. Ho) has conversant with the company of his intention to retire and not stand for reelection at the company’s next annual meeting. Once on the board, Starboard’s assemblymen and the remainder of the board will have the opportunity to evaluate whether this is the right management team to turnaround Qorvo’s fresh performance. If they decide that new management is needed, it is important to note that there has been a tremendous amount of consolidation in the semiconductor hustle in recent years, which has resulted in many senior and talented operators on the sidelines.