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14 November 2019

Skyworks’ quarterly revenue rebounds by 8%, or 20% excluding export-restricted Huawei

For full-year fiscal 2019 (ended 27 September), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures analog and mixed-signal semiconductors) has reported revenue of $3.377bn, down 12.7% on fiscal 2018’s $3.868bn.

Fiscal fourth-quarter 2019 revenue was $827.4m, down 17.9% on $1008m a year ago (since revenue from Huawei – until recently the firm’s second largest customer – was just $10m) but up 8% on $767m last quarter and $2m above the midpoint of the $815-835m guidance. Also, excluding Huawei Technologies Co Ltd, revenue rose 20% sequentially (one of Skyworks’ strongest sequential growth rates).

On 15 May the US Department of Commerce’s Bureau of Industry and Securities (BIS) added China-based smartphone and telecom network infrastructure maker Huawei to its ‘Entity List’ prohibiting the sale to Huawei of products covered by the Export Administration Regulations (EAR) without obtaining an appropriate license. Skyworks subsequently ceased all shipments to Huawei (which had contributed 12% of total revenue in fiscal first-half 2019).

By market sector, Mobile (Integrated Mobile Systems and Power Amplifiers) rebounded from 63% of total revenue last quarter to 67%. Broad Markets was about 33% of total revenue, still up on 28% a year ago but down from 37% last quarter. However, excluding Huawei it was up sequentially, as well as year-on-year by mid-single digits as a percentage. Senior VP & chief financial officer Kris Sennesael cites “multiple drivers… Wi-Fi 6 adoption, the 5G opportunity beyond the mobile phone, as well as some good traction in our audio play that we have as well”.

Highlights during the quarter included:

  • powering Samsung’s suite of 4G mobile devices and their first foldable 5G smartphone;
  • enabling LG’s V50ThinQ flagship 5G handset (featuring an OLED display and dual screens);
  • accelerating the ramp of the firm’s Sky5 portfolio supporting multiple 5G launches;
  • supporting leading infrastructure customers with 5G small-cell architectures;
  • securing Wi-Fi 6 design wins with Netgear in its Orbi and Nighthawk platforms;
  • delivering LTE-powered Internet of Things (IoT) engines across Sierra Wireless’ industrial gateways and transportation platforms;
  • commencing volume production of high-performance mesh network connectivity modules for Amazon, Juniper and Ruckus;
  • ramping fully integrated LTE solutions with major automotive manufacturers;
  • shipping Zigbee ultra-low-power devices for a tier-one home security provider;
  • expanding reach at Sonos, enabling its indoor/outdoor portable smart speakers; and
  • introducing cognitive chipsets for ultra-low-latency, next-generation wireless gaming headsets.

On a non-GAAP basis, gross margin has fallen further, from 51.2% a year ago and 50.4% last quarter to 50.3%, reducing full-year gross margin from 51.1% to 50.6%.

Operating expenses were $135m (16.3% of revenue), flattish through the March and June quarters.

Full-year net income has fallen from $1323.4m ($7.22 per diluted share) to $1.1bn ($6.17 per diluted share). Fourth-quarter net income was $261.9m ($1.52 per diluted share, above the $1.50 guidance), down from $349.7m ($1.94 per diluted share) a year ago. However, this is up from $233.6m ($1.35 per diluted share) last quarter.

Cash flow from operations was $417m for the quarter (almost doubling from $209.3m last quarter) and $1367.4bn for the full year (up 8.5% from $1260.6m for fiscal 2018). Quarterly capital expenditure (CapEx) was $84.4m (making $398.4m for the full year). Free cash flow was hence $333m (free cash flow margin of 40%), contributing to $969m for the full year (free cash flow margin of 29%, nearing the model target of 30%). Skyworks paid $75m in dividends (making $274m for the full year) and repurchased 1.9 million shares of common stock for a total $146m (making $658m for 8.9 million shares in the full year). So, in total, Skyworks has returned $932m to shareholders through buybacks and dividends in full-year fiscal 2019 (just over 96% of free cash flow).

Overall, cash, cash equivalents and marketable securities have risen by $112.1m from $970.1m at the end of last quarter to $1082.2m. Skyworks has no debt.

“Skyworks delivered solid financial results in the fourth fiscal quarter, closing a year that saw extraordinary market volatility and change,” says president & CEO Liam K. Griffin.

Skyworks’ board of directors has since declared a cash dividend of $0.44 per share of common stock (payable on 24 December, to stockholders of record at the close of business on 3 December).

“Looking ahead, we are well positioned to execute on our mission of delivering compelling 5G solutions across a growing and diverse suite of customers and markets,” reckons Griffin. “Our systems-level approach, highlighted by our Sky5 platform, now includes strategic capabilities in BAW [bulk acoustic wave filters], Wi-Fi 6, MIMO and custom diversity receive. Collectively, these solutions are unleashing the true potential of 5G – successfully providing a range of options to our customers while increasing the value and utility of each usage case. We are in the early innings of this substantial technology inflection, as we translate these dynamics into sustainable growth and profitability,” he adds.

“Strategic product ramps, content gains and an expanding footprint across a broad set of customers, end markets and applications are expected to drive sequential revenue and earnings growth in the December quarter,” says Sennesael. Specifically, in fiscal first-quarter 2020, Skyworks expects revenue of $870–890m (up 6.5%), gross margin roughly flat at about 50% (due to the lingering issues with Huawei business), operating expenses of $132m (cut by $7m year-on-year, to 15% of revenue, as Skyworks implements certain cost reductions), and diluted earnings per share hence up to $1.65.

See related items:

Skyworks’ quarterly revenue shrinks 5.4% due to Huawei ban

Skyworks’ quarterly revenue falls 11% year-on-year to $810m

Skyworks quarterly revenue down 7.6% year-on-year to $972m

Skyworks reports record quarterly revenue of $1.008bn, and ninth consecutive record year

Tags: Skyworks

Visit: www.skyworksinc.com

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