Welcome to Broadcom's Fourth Quarter and Fiscal Year 2019 Financial Results Conference Call. At this time, for opening remarks and introductions, I would like to turn the call over to Beatrice Russotto, Director of Investor Relations of Broadcom. Please go ahead, ma'am.

Thank you, operator, and good afternoon, everyone. Joining me today are Hock Tan, President and CEO; and Tom Krause, Chief Financial Officer of Broadcom. After the market closed, Broadcom distributed a press release and financial tables describing our financial performance for the fourth quarter and fiscal year 2019. If you did not receive a copy, you may obtain the information from the Investors section of Broadcom's website at broadcom.com. This conference call is being webcast live, and a recording will be available via telephone playback for 1 week. It will also be archived in the Investors section of our website at broadcom.com. During the prepared comments section of this call, Hock and Tom will be providing details of our fourth quarter and fiscal year 2019 results, guidance for fiscal year 2020 and commentary regarding the business environment. We'll take questions after the end of our prepared comments. Please refer to our press release today and our recent filings with the SEC for information on the specific risk factors that could cause actual results to differ materially from the forward-looking statements made on this call. In addition to U.S. GAAP reporting, Broadcom reports certain financial measures on a non-GAAP basis. The reconciliation between GAAP and non-GAAP measures is included in the tables attached to today's press release. Comments made during today's call will primarily refer to our non-GAAP financial results. With that, I'll turn the call over to Hock.

Thank you, Bea. Good afternoon, everyone, and thank you for joining today. Now we concluded fiscal year 2019 with record revenue of $22.6 billion, growing 8% year-over-year despite a challenging environment. Our semiconductor solutions segment declined 8% year-over-year, but this was more than offset by our infrastructure software segment benefiting from the integration and healthy results from the CA business. In semiconductors, almost all product lines were down year-on-year, with one clear exception, and that's networking, where the existing growth drivers continue their strong momentum. In infrastructure software, renewals in our core accounts grew double digits, which more than offset the expected attrition in our noncore accounts. Now as we embark on fiscal 2020, I want to provide you some insight into our latest strategic assessment of our semiconductor businesses and our current view of the market. I also want to give you an update on our software business, including our latest Symantec acquisition. I'm sure you have seen the guidance in our earnings release today that we are headed towards $25 billion in revenue in 2020. And I'll let Tom go through the details on how we get there. But before I turn this over to him, let me now give you the broader picture. So when we look at our semiconductor segment today, we are increasingly thinking about it as a core and fabless semiconductor business that consists of networking, broadband and storage connectivity products, focused on enterprise service providers and cloud infrastructure. Here, we get a lot of strategic synergies and scale across our end markets with our customers and with our core silicon technology. This in turn drives efficiencies in our sales, R&D and supply chain activities. Our infrastructure software businesses, which focus primarily on large enterprises are, in fact, quite complementary and enhance these core semi businesses by bringing us closer to our end customers. This gives us a natural barrier to entry and gives us comfort that we can drive sustainable revenue growth and improve profitability long term. Alongside these core semiconductor businesses, we have several valuable semiconductor businesses that are much more stand-alone in nature due to their unique customers, technology and supply chain characteristics. Now this will include our wireless businesses and our industrial businesses. We don't have the same kind of synergies with this as we do in our core semi business. Increasingly, we view this business as more financial assets, especially in terms of capital allocation, balance sheet optimization and how we choose to leverage resources and manage the company. Turning to our current assessment for our core semi business, it's extremely positive. We believe we are uniquely positioned with an industry-leading portfolio, extending connectivity across enterprise, telcos and cloud, in data center switching and routing. We're enabling the cloud with the transition to 400-gigabit per second. We also just announced 800-gigabit per second, which further demonstrates our leadership in this space by far. In 5G cellular infrastructure, we are leveraging our ethernet technology to bring the network to the Edge in open RAN or radio access networks through a combination of custom and standard products across both analog and digital domains. And as we know, as Moore's Law for computing starts to slow down as it has, we continue to gain momentum in developing and delivering hardware accelerators to offload computing for the cloud service providers across an increasing variety of workloads, initially with virtualization, hypervisors and expanding today to AI, security, encryption and video transcoding. And in wireless access in enterprise and home gateways, we are of course leading the market transition to WiFi 6. And finally, we actually do have now an organic integrated silicon photonics effort underway, combining our capabilities in switching with our strong legacy in fiber optics for next-generation cloud and networking architectures. So in summary, we plan to increase our investment in our core semiconductor businesses to position ourselves for expected future growth opportunities, where we can leverage our scale of investment, industry-leading focused execution and breadth of IP. Now we all know it has been a tough year for semiconductors in general, with our semiconductor segment down approximately 8% as I indicated. But if you look at our core semi business, as I define it, it has held up reasonably well. To put some numbers around it, this business did a little over $11 billion in sales in 2019, which was down just less than 4% from 2018. We think this business is stabilizing. And we believe given the growth drivers I just highlighted over the next several years that this business can actually grow 6% to 8% annually. Turning to infrastructure software. We started a few years ago with Brocade, a storage area networking switch business. Then we acquired CA, which is a leading independent provider of mainframe tools, and we just closed on Symantec, the leading enterprise security software provider in November. Our Brocade acquisition was predicated on view that a fiber channel SAN switching market for large enterprises was sustainable and that we could just grow our leadership position with additional investment. And after a couple of years now, it's fairly clear this investment thesis was right. Similarly, we bought CA because we felt the mainframe market for the launch of enterprises was stable and, in fact, growing, and that CA was critical to customers who rely on mainframes to run their businesses. It's still early innings one year now, just over one year, but mainframe compute is growing with our target customers. We are increasing investments in mainframes to support our leadership position. The CA customer transition continues with core accounts growing double digits while noncore accounts attrite as we had planned. We expect Symantec to start with $1.8 billion of core sustainable incremental annual run rate revenue that we believe we can grow to over $2 billion over the next 3 years. Our infrastructure software segment is becoming more predictable with ratable recurring revenue contribution from CA and now also with Symantec. And we anticipate over $7 billion infrastructure software revenue in fiscal 2020. In summary, therefore, our long-term plan for this company is to invest in organic growth in our core semi business while continuing to scale up our infrastructure software business through disciplined and highly accretive acquisitions. Now let me turn the call over to Tom.

Thank you, Hock. Let me start with a review of our fourth quarter and fiscal 2019 results. I'll then spend some time discussing our outlook for fiscal 2020, after which we will open up the call for questions. Consolidated net revenue for the fourth quarter was $5.8 billion, a 6% increase from a year ago. Semiconductor solutions revenue was $4.6 billion and represented 79% of our total revenue this quarter. This was down 7% year-on-year and up 5% quarter-over-quarter. On a sequential basis, networking sustained driven by an uptick in our custom silicon solutions. Storage also held up driven by increased demand for high-capacity drives. This was offset by increased volatility in broadband, especially as the market prepares for the WiFi 6 transition. And as is typical in our fourth fiscal quarter, wireless was seasonally up. Revenue for the infrastructure software segment was $1.2 billion and represented 21% of revenue. The CA business continues to perform well. SAN switching demand remains muted as our partner OEM supply chain continues to compress. That being said, the SAN switching business was up from the Q3 low points, and the market for these products looks to be stabilizing. Looking down the P&L sequentially. Gross margins dropped given the seasonal mix shift to wireless in our semi business, while operating expenses remained relatively flat at just over $1 billion. Operating income from continuous operations was $3 billion and represented 52.3% of net revenue. Adjusted EBITDA was $3.2 billion and represented 54.8% of net revenue. This figure excludes $143 million of depreciation. I would also note that we accrued $119 million of restructuring/integration expenses and made $150 million of cash restructuring/integration payments in the quarter. These expenses and payments are primarily related to CA. We spent $96 million on capital expenditures, and free cash flow represented 41% of revenue or $2.4 billion. In the quarter, we returned $1.6 billion to our common stockholders, including $1.1 billion of cash dividends. As we previewed when we announced the Symantec deal, in Q4, we initiated the transition from stock buybacks to debt repayment. In the quarter, we invested $587 million for the repurchase and elimination of 2.1 million AVGO shares. However, we also paid down $4.8 billion of debt with proceeds from our preferred stock offering and excess cash flow. We ended the quarter with $5.1 billion of cash, $32.8 billion of total debt, 398 million outstanding common shares and 444 million fully diluted shares for the quarter. Now let's recap performance for the full fiscal year 2019. Our revenue hit a new record of $22.6 billion, growing 8% year-on-year. Semiconductor solutions revenue was $17.4 billion, down 8% year-over-year. As Hock reviewed, revenue from our core semiconductor business, which does not include wireless and industrial, was down 4%. Infrastructure software revenue was $5.2 billion, which included $3.4 billion from CA mainframe and enterprise and $1.8 billion from Brocade SAN switching. Gross margin for the year was a record high 71%, up from 67% a year ago. The addition of CA as well as the beneficial mix in semiconductor product sales drove the gross margin expansion. Additionally, operating expenses expanded to $4.1 billion with the addition of CA, offset by lower annual performance bonus amounts relative to 2018. Operating income from continuing operations was $11.9 billion, up 14.4% year-over-year and represented 52.8% of net revenue. Adjusted EBITDA was $12.6 billion, up 13.5% year-over-year and represented 55.7% of net revenue. This figure excludes $569 million of depreciation. I would also note that we accrued $1.1 billion of restructuring/integration expenses and made $883 million of cash restructuring/integration payments in fiscal 2019. We spent $432 million on capital expenditures, and free cash flow represented 41% of revenue or $9.3 billion. Free cash flow grew 12.4% year-over-year. For the year, we returned $10.6 billion to our common stockholders, consisting of $4.2 billion in the form of cash dividends and $6.4 billion for the repurchase and elimination of 24.5 million AVGO shares. Okay. So now let's look ahead to fiscal 2020. The outlook for our business is as follows. In the semiconductor solutions segment, we expect to achieve approximately $18 billion in revenue. Let me unpack this a bit. We expect our core semiconductor business to deliver approximately $12 billion in revenues in 2020, which would represent approximately 7% growth compared to 2019. Our wireless businesses which, let me remind everybody, consists of 3 primary product lines: one is RF; the other is WiFi/Bluetooth combos; and finally, our mixed signal custom products, which we sell almost exclusively to one of our large smartphone customers. RF, which represented approximately $2.2 billion of revenues in fiscal 2019 is expected to grow high single digits given the initial ramp in 5G phones. WiFi/Bluetooth combos, which was approximately $2.2 billion in fiscal 2019, is expected to be down low single digits. The adoption of new WiFi 6 solutions at our 2 large smartphone customers will be offset by the completion of our movement away from noncore, lower-margin legacy WiFi business, which will adversely impact this product line's 2022 revenues. Finally, our mixed signal custom product line, which was approximately $1.1 billion in fiscal 2019, is expected to drop to less than $500 million in fiscal 2020. The reduction in revenues here is driven by a change in architecture at our primary smartphone customer as well as our decision to reduce our investment in this area and focus our engineering resources on more sustainable and profitable activities in our core semi business. Finally, industrial, which consists primarily of optoelectronic power management and sensing product lines, we expect business will stabilize and recover in fiscal '20 after a challenging fiscal 2019 and to contribute approximately $1 billion in revenues. Switching to the software segment. As Hock reviewed, we expect the business to grow to approximately $7 billion. Symantec is expected to contribute approximately $1.8 billion, including the effects of purchase accounting, while CA and Brocade are expected to be relatively flat to up slightly. So on a consolidated basis, we are forecasting net revenue to be approximately $20 billion -- $25 billion, excuse me, plus or minus $500 million for fiscal 2020. One housekeeping item, our IP or intellectual property segment will be included in our semi solutions segment going forward given this business represented a material amount of revenue. We'll therefore have 2 reporting segments in fiscal '20, semiconductor solutions and infrastructure software. Turning to our fiscal year 2020 guidance. On a non-GAAP basis, operating margins and adjusted EBITDA margins are expected to be relatively flat in fiscal '20. There are a number of specific headwinds. As Hock discussed, we are increasing our investment near term in our core semi business to take advantage of growth opportunities we see there. We're also in a transition year with Symantec given effects of purchase accounting near term and onetime expenses tied to the transition services agreement in place with Norton LifeLock. And finally, we will have a headwind from our bonus accrual. We'll be setting a target, which impacts 2020. Looking beyond fiscal '20, we expect to continue to expand our operating margins organically and are targeting 55% by fiscal 2022. Now on to capital allocation. We remain committed to returning approximately 50% of our prior year free cash flow to stockholders in the form of cash dividends. With that, on the dividend, based on approximately $9 billion of free cash flow after M&A and related items that we generated in fiscal 2019, we are increasing our target quarterly common stock cash dividend starting this quarter to $3.25 per share. This constitutes an increase of 23%. We plan to maintain this dividend payout throughout the year, subject to quarterly Board approval, which means we plan to pay out just over $5 billion in cash dividends in fiscal '20. Consistent with our capital allocation policy, we will reassess the dividend this time next year based on our fiscal '20 free cash flow from operations results. In addition, we plan to pay down approximately $4 billion in debt in fiscal '20 as part of our commitment to maintain our investment-grade credit rating. That concludes my prepared remarks. [Operator Instructions]. Operator, please open up the call for questions.

[Operator Instructions]. Our first question comes from Harlan Sur with JP Morgan.

One of the areas obviously which has been a strong growth driver for the team in 2019 as you mentioned, Hock, has been cloud and hyperscale data center networking and compute acceleration. You got Tomahawk, Trident, Jericho, your compute and security acceleration, ASICs and the new optical connectivity portfolio. There was a bit of pause in cloud spending in the first half of this year, but it looks like that, that is starting to reaccelerate and looking to be strong in 2020. You also have the start of the 400-gig upgrade cycle. So for fiscal '20, how do you see the data center part of your semi franchise performing relative to 2019? Is this going to be another strong year? And then just secondarily, one of your customers, Cisco, just announced that they're getting into the merchant silicon market for cloud networking. You guys have a strong position here and, in fact, have helped these guys, both merchant and ASIC on their networking platforms. It would be great to get your views on this customer now as a potential competitor.

Well, let's start with the first part of your question, which is how do we see 2020 business for networking. And there are 2 parts to each of these, as you know. There's the cloud guys, service provider and cloud guys, and there is the more traditional enterprise. And we see spending in the cloud guys, as you correctly pointed out, stepping up more and more in 2020. We've seen some of it this year, calendar -- in the later part of calendar '19 in investment in storage, and we will start to see in 2020 spending on networking to start ramping up, especially with regard to 200-gigabit and 400-gigabit, especially in the second half of the year, which will be great for us because of our product portfolio, Tomahawk 3 and even Trident 4, in these areas as well as, of course, the spine. So to us, we see 2020 as continue growth momentum basically in our data center business, especially when it relates to cloud. In enterprise, we are not so sure. Enterprise has clearly taken a pause second half of '19, calendar '19, and we see that pause probably continuing for a while into '20 before possibly, in our thinking, slowly recovering later half of 2020 for enterprise. And that's -- I mean there's a clear difference in the spending. And with respect to one of our very good customers turning into -- coming into merchant silicon with the recent announcement, I think yesterday, on One Silicon -- or the Silicon One and the Router 8000, I think it's -- we welcome that because it validates couple of things we've been pushing for years. One of which is that there will be and there has been and will be more and more disaggregation of software, the operating system, from hardware, the silicon, the chip that supports it. There will be more and more disaggregation. As you know, traditionally, it's all wrapped into a black box as one. That disaggregation path has obviously been pushed, and we have enabled that by the cloud guys, the hypercloud guys. And we have been very successful enabling it, and that's great. So the fact that Cisco has joined it, in our view, validates the model, the trend we have been pushing. And it's great to see that we're right in that regard. So we'll welcome the competition. I just want to add it's not only in cloud that we're seeing that happen. It's also in enterprise, traditional enterprise, particularly some of the large telcos who you classify as cloud, too, and I don't need to mention names, but a few of the very large telcos, both in North America and in Europe are also pushing down that path with us very, very closely. And they're very -- and some of them are very far along, especially -- and we're using our Jericho 2 router to enable it. And talking of which, that Jericho 2 router, which we're using today to enable the path of those telcos, enterprises towards disaggregation of hardware and software, has been around, and we've been shipping it for over a year. And that runs 10 terabits per second. The same bandwidth as Silicon One announced yesterday. And earlier this week, we announced as a future successor 25.6-terabit per second switching and routing. And that's where we're pushing now, 2.5x the performance of what just came out.

Our next question comes from Craig Hettenbach with Morgan Stanley.

A question on the Symantec business, the $1.8 billion starting point. Can you talk about if there's any impact there of any divestitures you might be considering? And then once getting past that, just comment around do you think you can grow it from that level? What are some of the growth drivers that you see in the Symantec side of the business?

Craig, it's Tom. I think we talked about this in the past. We take the original run rate, which is about a $2.4 billion run rate on the enterprise business. We're going to focus on core accounts in terms of investment and where we're going to try to drive our combined strategy with CA and Symantec. We're also going to rationalize the portfolio around some of the noncore businesses, especially in the areas of services. So when we take that into account as well as some of the effects on purchase accounting, which is a couple of hundred million dollars, we're going to start a run rate of about $1.8 billion. And then we think we can grow that. It's obviously a growing market. We've talked a lot about the growth of the market. We've talked about the three core franchises, the endpoint protection, DLP and the web proxy area. We think those three areas focused on core large accounts will allow us to continue to grow the business over the next several years, and we should comfortably exit year 3 at a run rate over $2 billion.

Our next question comes from Vivek Arya with Bank of America.

I actually wanted to dig into the fiscal '20 guidance and the 2 aspects of what, Hock, are you baking in for trade tensions and kind of the return of shipments to Huawei or other Chinese customers. And the other aspect, you are now classifying wireless as a financial asset rather than what has been kind of a core strategic asset. And I'm not sure what the implications are longer term for Broadcom.

To answer the latter question, not -- short term, nothing has changed. It's available asset. And it's still there, we are still investing and making sure it sustains itself. It's just that we are highlighting it as a fact that it's -- that differentiated from the core semiconductor sets of products, portfolio of products, we're highlighting there is a difference and -- because those are stand-alone franchises. And it gives you a sense how powerful those technology and franchises are that they can stand-alone, fairly large size in these markets. But as we look at all our portfolio companies, they are assets and franchises and where we particularly highlight for this purposes of this review while we pull out costs and misses. There's a lot of synergies. There's a lot of push in data centers, networking, and it covers both cloud and enterprises and covers both hardware and increasingly software operating systems, like eventually even infrastructure software. And we want to highlight that difference and highlight the difference, in particular, to show you that in those core areas of data centers, we don't drop as much as the marketplace, as we saw in 2019, where year-on-year organically, we're down only 4%. And that we expect some -- in 2020 to actually grow -- recover fairly quickly to mid- to high single digits year-on-year. Very fast in this end market because the environment is -- in the market, the environment is good. And we lead it by a long shot. We lead in providing the technology, which is another interesting thing between selling systems and selling components. Components, be it software, be it semiconductor solution, is driven a lot by technology, good, strong technology which can be applied to allow customers to create differentiated systems. Selling systems, as a final in software, is very much a relationship business, a very embedded software, where the key is service and support as opposed to technology, to get to that difference. But that's really what we're trying to show here. That's why we highlight the strength of our core semiconductor network franchise.

Our next question will come from Ross Seymore with Deutsche Bank.

I guess a two pronged question. The 7% growth you're talking about and what you're now calling core, from an answer to an earlier question, it seems like networking is a big portion of that. But can you talk through a little bit about the other moving parts, broadband, et cetera? And then within the WiFi/Bluetooth combo side of the, I guess wireless business, can you give us a little more color on what's happening with why that's going down low single digits year-over-year? And when you bought that asset, people thought you might have gotten rid of it and divested it. Then you seem to really like the differentiation, the sustainability. Now it seems like it might be somewhere between those 2 viewpoints. So a little color would be helpful.

That's a good point. On our core semiconductor business, touching on the first part of it, obviously networking is -- especially merchant silicon in networking has been a very strong driver. And particularly so in the latter part of '19 when enterprise spending slowed down, and it has stabilized, but it has definitely slowed down. And -- but cloud starts to recover, and the various -- the portfolio, the various positions we have -- product portfolio we have in all these areas allows us on balance to mitigate quite a bit this slowdown. And the big -- one the of biggest area that allows mitigation to any slowdown in networking, as you've seen, is compute offload. Here, this is very much a cloud spend. And the biggest area of mitigation, it continues to be AI. We ship AI chips, provides one of the biggest segment for opportunities, I should say, for compute offload business. And this is a real business now. We're shipping several hundred million dollars a year and growing of these AI chips. We are also starting to emerge in a few other areas as in virtualization or hypervisor, and we all typically call Smart NIC. But that, we're starting to see happen. And that's also in cloud. And in enterprise, the move towards higher bandwidth mix, performance mix, is also helping clients there. So there's a whole slew of things in data centers that mitigate each other. Having said that, in 2019, especially second half, broadband. We are very big in this area. The video delivery in cable in -- which are in DSL, digital subscriber line copper, or PON, fiber to the home, slowed down second half '19. We're now seeing, as we approach the end of the year, a lot of great momentum as telcos seem to recover their spending in broadband, and we're seeing a very sharp recovery. When all this mix is put together, broadband, we see as far as a market, that's very stable, go through cycles with an underlying push on WiFi access as more and more of this access gateways are now deploying WiFi, as I say, especially the next-generation WiFi 6. So that creates a little degree of growth. But broadband in general, stable, goes through cycles and sometimes will offset it. But the data center networking business is a secular growth area, and that's why we talked about stepping up our investment in this area. And that's the other reason we want to highlight on the call, that we are actually investing, increasing the level of investment as a percent of revenue, as an example, in this particular area. And that includes our foray into silicon photonics, which is intended to enable integration of the silicon switch, together with fiber optic interconnects as we move from 25.6-gigabit per second routing to the next gen, 2 years from now, 51-terabit per second. It's so high density, I think we need that integration, and we're preparing towards that direction.

Our next question comes from Mitch Steves with RBC Capital Markets.

I kind of wanted to go into the operating margin side of the equation, you guys are talking about 55%. But given the fact that you guys have got more software assets and it seems like your integration is going well as well, is there any reason why that couldn't be higher? I guess, why is it so, I guess, muted relative to the mix improving on the software side?

Well, I figured one way -- I thought 55% sounds pretty good. I mean we're moving from what is around 52%, getting to 53% over the next 3 years to 55%. It's like -- something out 3 years is a trajectory. And we believe we are well on that trajectory. And you're right, you get to more than 55%, but we figured 55% is a nice target milestone to land in. And we may get there in 2 years instead of 3.

Our next question comes from Edward Snyder with Charter Equity Research.

Hock, in terms of the Symantec acquisition, it seems to me you kind of set this up a little bit different, a lot of the cost savings will be done before you get there in terms of kind of downsizing some of the assets that you don't need. Should we expect that some of the -- that you should see synergies from this accelerate -- or not accelerate, but show up sooner than we have with like CA and some of the other ones? I know it's -- I'm not looking for guidance. I'm just trying to get a feel for how you're seeing the synergies play out for CA. I know you talked about the revenue side of it, too. But what we can expect, because I'm doing quarterly models now, just trying to get an idea of what that impact would be on cash flow in the second half of your fiscal year.

Okay. That's a very good question actually, and to different -- to show the difference between the CA and Symantec because there is a clear difference. To begin with the structure of the deal, CA, we bought the whole company. And then we have to sit there, watch you guys -- you guys watch us as we restructure, and that does take longer to get to an end state, which we're not quite there yet, by the way, but getting closer into the CA integration unlike Symantec. Symantec is a carve-out of an asset. So you're right. It will get us to the end state quicker -- it will as we expand. But in the short term, we had to handle transition services agreements from the RemainCo, Norton LifeLock, while we work through that. And there will be probably 6 months of transition services arrangements before we're out of it. But then we get to -- because we only take the assets we really want and the people we really want, you'll see us get there faster. And that's where we expect to be able to do that.

Our next question comes from Matt Ramsay with Cowen.

Hock, in some of your comments, you talked about the new Cisco platform and the performance level that your switching and routing solutions have that are significantly higher than that. I wonder if you might talk a little bit about the mix of business in your switching and routing business, which pieces of revenue are at the highest performance points and what the tiering looks like within that stack, just to understand a little bit about what percentage of your business there might be competition with and which parts are super differentiated at those highest performance points?

I'm not a technologist to be able to delve in the level you want to. Would be happy to take it separately. But broadly, let me try to answer the question. We have a pretty broad portfolio in our switching and routing business. And by the way, the differentiation between switching and routing, the way we are architecting it is rapidly going away. It's how much more features you put in one versus the other, which is what differentiates between the Tomahawk and the Trident product line, not trying to confuse people. But in broad terms, we have very high -- we are -- we have a whole portfolio that range from very high-end spine, which is routing, top of the rank switching, very high-end throughputs, all the way down to campus, which is more lower end, and we have a whole range of portfolio products that are -- I would say that are created to match each segment we are in. And it cuts across the whole range, from very high end, hyper cloud, and even routing for operators like the Jericho 2 and beyond, all the way down to very low-end campus switching routing, which are chips that are relatively simpler. And our strength is our ability to leverage across this entire portfolio.

Our next question comes from C.J. Muse with Evercore.

I guess wanted to just revisit the operating margin side. And if you could speak to, I guess the moving parts in terms of how fast you expect to kind of cost down on Symantec and perhaps what increased investments might look like on the OpEx side to help us really understand the drivers of that flat guide?

C.J., it's Tom. I'll take that. So as we outlined on the call, I think the -- there's sort of 3 major pieces. But we do have a couple hundred million dollar headwind in our annual performance bonus target because we under accrued in '19 given that we didn't hit our numbers. So that's one, it's a technical one, but it matters. The other is we are increasing investment, a, couple of hundred million dollars in the semiconductor business as well. So that's another headwind. And then from a Symantec perspective, this is a business that was doing a couple hundred million dollars of EBITDA when we bought it. We're going to enter the year day 1 with obviously a much more elevated EBITDA figure, which we'll report on next quarter. But I think when you think about the TSA elements and some of the other restructuring items, there, you have another couple hundred million dollars that you have to get through as we look through the year. So I would think of it in those 3 equal parts. And then if you back that out and then you think about some of the organic growth that we're driving in core semis, we still have margin expansion. We've talked about this a lot over the years in terms of where we can take gross margins in our core semiconductor business, and the scale advantages that delivers in terms of the operating margin line. That's how we get to the 55% target over the next 3 years.

And today's final question will come from William Stein with SunTrust.

Great. I want to say I like that 55% margin target. But the question relates to 5G. Hock, I think you talked about the pace of growth in -- pardon me, the pace of growth as it relates to 5G and handsets. Can you address your exposure to 5G infrastructure?

Oh, absolutely. Yes. I think a lot of discussion have been a lot on 5G handset which, as Tom mentioned, especially in our RF side, RF division, we're very, very much in it. And it's great to the point where we expect to grow 19 to 20 because of content increase. But with respect to infrastructure, we are getting a lot of traction. And I indicated in my opening remarks, and we've been very specific in the base station as a best example. I call it radio access network. It's really -- another term is base station. And the base station for 5G networks to improve latency, to improve density throughput, the architect, the operators are pushing the network, the backhaul, all the network that takes a signal from the base station, they're pushing that right to the edge, which is into the base station. In other words, ethernet is likely to be under open RAN, the open base RAN, we'll push as far as possible into the radios. And you really run the entire line end-to-end as much as you can on ethernet. Even CPRI, which is typically the protocol that's used between the radio -- in the radio is now being minimized and squeezed out as opposed to just running a common higher bandwidth ethernet, which is, by the way, plays right up to our switching strength, routing and switching strength. So we are very engaged now with OEMs in those -- on infrastructure side, in developing, testing and working on the key elements within the base station. That's our push very hard into 5G infrastructure, which is to no degree, part of the increased investment in core semis that Tom indicated of at least $200 million a year, not all of it, but a big part of it.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect, and have a wonderful day.