18 May 2021
Skyworks reports record March-quarter revenue of $1.172bn, up 53% year-on-year
For fiscal second-quarter 2021 (to 2 April), Skyworks Solutions Inc of Woburn, MA, USA (which manufactures analog and mixed-signal semiconductors) has reported revenue of $1171.8m (near the top of the $1125-1175m guidance range), down from last quarter’s all-time record of $1510m (which was boosted by Skyworks’ largest customer spiking to 70% of total revenue – before falling back this quarter to about 50%). Despite this, the March quarter is still a fiscal Q2 record, up 53% on $766.1m a year ago, based on early 5G adoption as well as strong demand for Broad Market solutions.
For the Mobile business sector (Integrated Mobile Systems and Power Amplifiers), revenue was $787m, down 34% on the exceptional $1184m last quarter but up 47% on $536m a year ago, driven largely by widespread content increases as 5G phones are ramping across smartphone OEMs worldwide. In particular, Skyworks expanded the reach of its Sky5 portfolio across premium- and mid-tier 5G smartphone launches at Samsung, Oppo, Vivo, Xiaomi and other leading OEMs.
“Our Broad Markets portfolio continues to gain momentum, with strong sequential and year-over-year growth,” notes president & CEO Liam K. Griffin.
For the Broad Markets business sector, revenue was a record $385m, up 18% on $326m last quarter and 67% on $230m a year ago, benefiting from a diverse set of use cases, including the adoption of technologies such as WiFi 6 and 6E, 5G wireless infrastructure, and automotive, along with the continued positive momentum in the audio solutions business.
In the Internet of Things (IoT) space, Skyworks secured wins across a diverse set of customers, specifically: partnering with Netgear to deploy WiFi 6 and 6E routers; launching WiFi 6 gateways at Deutsche Telekom, Nokia and Altice; shipping home security solutions to Xfinity; capturing design wins with Google Nest for smart audio devices; and delivering low-latency cognitive audio platforms powering wireless gaming headsets at Microsoft and Sony.
In the industrial space, Skyworks delivered cellular IoT modules to Quectel and Gemalto.
In infrastructure, the firm leveraged its wireless infrastructure portfolio to deploy MIMO base stations with Nokia and Ericsson.
Finally, in automotive, Skyworks ramped telematics and driver-assist platforms with Volkswagen, LG and GM OnStar.
“Our demonstrated operational expertise allowed us to drive yet another strong quarter of design-win execution,” summarizes Griffin.
On a non-GAAP basis, gross margin was 50.8%, down from last quarter’s 51.1% but still up on 50.2% a year ago, despite a challenging and tight supply-chain environment.
Operating expenses have risen further, from $149m last quarter to $155m (13.2% of revenue), exceeding the expected $150-152m but demonstrating spending discipline while continuing strategic investments to drive growth.
Net income was $395.2m ($2.37 per dilute share, exceeding the $2.34 guidance), down from last quarter’s record $560m ($3.36 per diluted share) but up from $229.5m ($1.34 per dilute share) a year ago.
Operating cash flow was a record $615.7m (up from last quarter’s $485.1m). Capital expenditure (CapEx) was $140.8m. Free cash flow was hence a record $475m (free cash flow margin of 41%). Skyworks paid $83m in dividends (the same as last quarter).
Overall, during the quarter, cash, cash equivalents and marketable securities rose from $1019.3m to $1423.6m. Skyworks has no debt.
Given the acquisition of the Infrastructure & Automotive business of Silicon Labs (announced on 22 April, and expect to close in the September quarter), Skyworks has temporarily suspended its share repurchase program.
Nevertheless, Skyworks’ board of directors has still declared a cash dividend of $0.50 per share, payable on 8 June, to stockholders of record at the close of business on 18 May.
“We continue to leverage our expansive technology reach and deep customer engagements, spanning both Mobile and Broad Markets, to capture the exploding demand for connectivity. And with our planned acquisition of the Infrastructure & Automotive business of Silicon Labs, we expect to accelerate that momentum further,” says Griffin. “Our core business, combined with our pending acquisition of the Infrastructure and Automotive business of Silicon Labs, position Skyworks to capture an outsized portion of the opportunities that lie ahead,” he believes.
“Based on robust demand for connectivity solutions in Mobile and Broad Markets, we expect continued momentum and year-over-year growth into the June quarter,” says senior VP & chief financial officer Kris Sennesael.
For fiscal third-quarter 2021 (the firm’s slowest seasonal quarter of the year), Skyworks expects revenue of $1.075-1.125bn, down 6% sequentially (including Broad Markets flat to slightly down) but up 49-50% year-on-year (with Broad Markets up 50-60%). Gross margin should correspondingly fall slightly sequentially to 50.25-50.75%, while still being up 40 basis points year-on-year. With operating expenses of $159-161m, diluted earnings per share should be $2.13 (up 70% year-on-year).
“We do of course expect further gross margin improvement in the second half of the year as we start ramping, as we usually do in the September and the December quarters,” notes Griffin.
“Skyworks is on track to deliver record results for fiscal 2021, clearly demonstrating the value of our technologies as we address an increasingly broad landscape of impactful customers and applications,” says Griffin. “Further, the pending acquisition of the Infrastructure & Automotive business fits squarely with our strategic priorities to expand our market reach, accelerate revenue diversification, and drive industry-leading profitability and cash flow. In parallel, Skyworks is solidifying its global leadership, technology breadth and vast operational scale powering the connected experience in mobile, industrial, automotive, enterprise and other emerging application.”