AES Semigas


18 November 2020

Skyworks’ revenue grows a more-than-expected 30% in September quarter

For full-year fiscal 2020 (ended 2 October), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures analog and mixed-signal semiconductors) has reported revenue of $3356m, down slightly on fiscal 2019’s $3377m.

However, fiscal fourth-quarter 2020 revenue was $956.8m, up 30% on $736.8m last quarter and 16% on $827.4m a year ago (and exceeding the $830-850m guidance), driven by increasing adoption of the firm’s mobile solutions and rising broad market momentum.

By business sector, revenue grew 30% sequentially and by double digits year-on-year in both Mobile (Integrated Mobile Systems and Power Amplifiers) and Broad Markets (up by almost $70m to a record of $295m, aided by “incredible diversification, with many new customers”). As for the previous two quarters, the split of total revenue was again 69% Mobile and 31% Broad Markets.

“During the quarter, our solutions powered a broad set of use cases. From the newest and most innovative smartphones to industrial IoT, automotive, cognitive audio and touchless commerce. Specifically, in Mobile, we accelerated the ramp of our Sky5 portfolio, while supporting leading 5G smartphone launches, including those from Samsung, Oppo, Vivo, Xiaomi, Google and other major tier-1s,” says president & CEO Liam Griffin. Conversely, Huawei was slightly below expectations, at about 3% of total revenue.

“In IoT, we enabled touchless point-of-sale systems at Square, powered WiFi 6 access points for Amazon, ramped WiFi 6 solutions for advanced routers at NETGEAR and ASUS, and launched residential gateways at Verizon and Telecom Italia. We also supported Facebook's newest Oculus AR/VR platform. And we further bolstered our position in low-latency cognitive audio solutions, powering wireless headsets at Logitech, Razor and Sony, among others,” Griffin adds.

“In the industrial space, we introduced embedded connectivity modules enabling Fibocom's latest enterprise IoT architectures. We delivered critical medical applications at Boston Scientific and GE and also supported wireless utility metering at Itron and Census.”

“In infrastructure, we secured multiple design wins in 5G wireless infrastructure deployments, powering next-generation MIMO base stations and small-cell installations.”

“In automotive, we ramped telematic subsystems for BMW and Tesla and launched high-speed connected-car solutions for Daimler and leading OEMs in Japan and Korea.”

“These engagements illustrate the diverse and expansive nature of our portfolio, supporting a broad array of customers and applications,” summarizes Griffin.

On a non-GAAP basis, full-year gross margin has fallen further, from fiscal 2019’s 50.6% to 50.2% for fiscal 2020. However, quarterly gross margin was 50.4% in fiscal Q4/2020, up on 50.1% last quarter and 50.3% a year ago, despite a headwind of 75-100 base points from the COVID-19 pandemic.

Quarterly operating expenses were $147m (15.4% of revenue, cut from 18.9% last quarter), demonstrating leverage in the firm’s operating model while continuing strategic investments in support of future growth.

Full-year net income has fallen from fiscal 2019’s $1076.7bn ($6.17 per diluted share) to $1041.3m ($6.13 per diluted share). However, fiscal Q4/2020 net income was $312.2m ($1.85 per diluted share, exceeding guidance by $0.34), up from $210.8m ($1.25 per diluted share) last quarter and $261.9m ($1.52 per diluted share) a year ago.

“Skyworks significantly exceeded September quarter expectations in revenue and earnings per share, capping off a fiscal year that both tested and demonstrated the resilience of our business model,” says Griffin.

“The Skyworks team executed exceptionally well despite a challenging environment, navigating the COVID-19 pandemic and headwinds from US-China trade relations,” comments senior VP & chief financial officer Kris Sennesael.

In fiscal Q4/2020, cash flow from operations was $267m (taking full-year operating cash flow to $1.2bn). Capital expenditure (CapEx) was $146m. Skyworks paid $84m in dividends. Also, indicating its “conviction in the underlying strength of our business”, the firm repurchased 1.7 million shares of its common stock at an average price of about $140 per share for a total of $231m. (During full-year fiscal 2020, Skyworks returned $955m to shareholders via $307m in dividends plus $648m through the repurchase of 6.3 million shares.)

Overall, cash, cash equivalents and marketable securities fell from $1162m at the end of last quarter to $980m. Skyworks has no debt.

“We continue to deliver very strong free cash flow, and we continue to return all of that back to the shareholder… We’ve been very active from a buyback point of view,” says Sennesael. “That still leaves us $1bn of cash on the balance sheet with no debt, and so there is optionality from an M&A point of view.”

“With 5G technology launches now well underway, we are ramping our innovative Sky5 solutions in a rapidly expanding set of end markets, from mobile to IoT, automotive and wireless infrastructure. Increased demand for reliable, ultra-fast wireless connections in our homes, businesses, schools and medical facilities is driving strong momentum throughout our product portfolio, positioning Skyworks for continued growth,” continues Sennesael.

“We expect double-digit sequential revenue and earnings growth in the December quarter, fueled by content gains and product ramps across multiple 5G-enabled smartphone platforms and increased demand across our broad markets portfolio.”

For fiscal first-quarter 2021, Skyworks expects of $1040-1070m, up 10% sequentially and 18% year-on-year (with sequential growth in both Mobile and Broad Markets). Specifically, Broad Markets should grow strongly, to a new record over $300m. Mobile is expected to accelerate, driven by sequential growth for South Korea’s Samsung as well as key China-based customers Oppo, Vivo and Xiaomi. No revenue for Huawei has been included despite the fact that Skyworks recently obtained a limited license from the US Department of Commerce to ship certain products to Huawei. “We are still figuring it out with the customer, which products they need, which products they want,” says Sennesael.

Gross margin should rise slightly to 50.25-50.75% as the firm continues to drive profitability expansion. “We still have some headwinds as a result of COVID-19 with social distancing, extra cleaning and sanitation, and some disruption in the supply chain here that is hitting us,” notes Sennesael. “So, we expect over time to see further improvements there on the gross margin towards our target model of 53%.”

With operating expenses of $148m, diluted earnings per share should be $2.06 (up 11% sequentially and more than 20% year-on-year).

Dividend payment

Skyworks’ board of directors has declared a cash dividend of $0.50 per share of common stock (payable on 10 December) to stockholders of record at the close of business on 19 November.

See related items:

Skyworks’ June-quarter revenue falls less than expected 4% to $736.8m, aided by 5G launch in China

Skyworks’ March-quarter revenue falls 5% year-on-year to $766.1m

Skyworks’ quarterly revenue grows a more-than-expected 8% sequentially to $896m

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

Tags: Skyworks




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