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13 November 2008


Skyworks grows 22% year-on-year to record $233m revenue

For fiscal fourth-quarter 2008, Skyworks Solutions Inc of Woburn, MA, USA, which manufactures linear products, power amplifiers, front-end modules and radio solutions for handset and infrastructure equipment, has reported record revenue of $232.6m, up 8% on last quarter’s $215.2m and 22% on $190.5m a year ago (and exceeding July’s guidance of $225m).

Due to higher equipment efficiencies, progress on yield improvement initiatives, and double-digit year-on-year material cost reductions, non-GAAP gross margin has improved for the sixth consecutive quarter (to 40.8%, from 40.6% last quarter and 39.4% a year ago). Net income was $54.8m, more than double $20.5m last quarter.

Skyworks has also reported a sixth consecutive quarter of improving cash flow, generating $52m from operations (totalling $174m for fiscal 2008). Capital expenditure was $13m. The firm also retired $62m of convertible debt.

During fiscal 2008, Skyworks doubled its smart-phone front-end module (FEM) shipments year-on-year, to more than 40 million units, as its Intera portfolio of FEMs supports the rapid growth in the emerging smart-phone segment. Reflecting increasing diversification into adjacent markets within its Linear Products business, during the quarter the firm also secured a five-year, multi-million dollar defense contract with Lockheed Martin of Bethesda, MD to supply high-precision microwave components for radar applications, airborne aircraft carriers, and fighter jets. Skyworks also ramped shipments of smart (i.e. remote) meter reader solutions (in support of Itron and Sensus), and launched a portfolio of voltage-controlled oscillators, frequency synthesizers, mixers and amplifiers targeting home area networks and industrial automation applications.

“While we certainly feel the impact of the market downturn, we’re fortunate that we have several product investment areas that are just now beginning to ramp,” says president & CEO David J. Aldrich. “We’re not as vulnerable to a single-point issue with a customer or a couple of customers. We have some programs with pretty high average selling prices (ASPs).”

The migration to higher-end 3G and smart-phone devices - though happening more slowly than expected, given the current economy - expands Skyworks’ addressable market by billions of dollars, from roughly $2 per phone in 2G to $6 in 3G multi-mode (a 3x increase), reckons Aldrich. “We’re uniquely able to sweep in switching, logic, filtering and wireless local-area network functionality,” he adds. “Market share gains [e.g. from troubled rival Anadigics], along with this higher-dollar-content multi-mode content trend, are having a compounding effect on the top line of our business. This trend is enabling us to continue to grow even under the most pessimistic handset forecast scenarios.”

“Customer and market diversification along with strong execution are enabling us to continue growth,” says Donald W. Palette, VP & chief financial officer. Growth in new customer platforms more than offset broad market softness. Skyworks has now partnered with all the top base-band OEM manufacturers. “We’re continuing to diversify within our handset business, with increasing support of all five top Tier 1 handset OEMs as well as two of the leading smart-phone suppliers,” adds Aldrich.

“As our smart-phone unit growth trajectory at two times the market growth rate highlights, we’re clearly gaining market share. We’re beginning to demonstrably outperform our traditional markets, while also penetrating new applications,” he adds. “In fact, the weakening industry backdrop is accelerating vendor share consolidation as both our linear and cellular handset customers increasingly award programs based on highly integrated, low-cost architectures, innovative roadmaps, operational scale and balance sheet strength,” reckons Aldrich.

Based on its strong order backlog, for fiscal first-quarter 2009 (to end-December 2008) Skyworks expects further increases in both revenue (to $240m) and gross margin (to 41-41.5%).

“Our guidance incorporates current market uncertainty and, at the same time, reflects Skyworks' ability to outperform our addressable markets,” says Aldrich. “Skyworks’ record performance and growth outlook despite the slowing global economy demonstrates solid progress in our strategic plans to diversify, gain market share and deliver continued operational improvements.”

In addition, Skyworks is executing process qualification for transitioning its GaAs fab in Newbury Park, CA from 4-inch to 6-inch wafers (on track for late 2009-2010). In the meantime, it has HBT foundry Kopin as a partner to ramp 6-inch externally, creating a ‘buffer’ of capacity. “We could actually do an in-line transition, machine by machine, process step by process step, without any disruption,” says Aldrich.

See related items:

Skyworks grows faster-than-expected 23% year-on-year

Skyworks exceeds $200m quarterly revenue guidance

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