AES Semigas


11 August 2023

Skyworks’ June-quarter revenue down 13% year-on-year due to ongoing inventory digestion for Android

For fiscal third-quarter 2023 (to end-June), Skyworks Solutions Inc of Irvine, CA, USA (which manufactures analog and mixed-signal semiconductors) has reported revenue of $1071.2m, down 7% on $1153.1m last quarter and 13% on $1232.6m a year ago.

Skyworks’ largest customer Apple remained about 64% of total revenue.

Mobile Products comprised about 59% of total revenue, with broad content gains across the firm’s largest customer’s product portfolio being offset by ongoing weakness in demand from the Android smartphone ecosystem as those OEMs continue to reduce their inventories.

Broad Markets comprised about 41% of total revenue, with another strong contribution from the automotive, infrastructure and industrial markets. Specifically, automotive applications posted double-digit year-on-year revenue growth.

On a non-GAAP basis, gross margin has fallen further, from 51.2% a year ago and 50% last quarter to 47.5%, driven mostly by temporary factory under-utilization as the firm right-sizes its inventory levels.

Operating expenses have been cut further, from $257.5m a year ago and $190m (16.5% of revenue) last quarter to $182m, outperforming the targeted $183–187m, given the ongoing focus on managing discretionary expenses.

Net income has fallen further, from $393.6m ($2.44 per diluted share) a year ago and $323.1m ($2.02 per diluted share) last quarter to $276.3m ($1.73 per diluted share, although this exceeds the $1.67 guidance).

Operating cash flow was $305.7m (taking the year-to-date operating cash flow to a record $1.491bn). Capital expenditure has been cut further, from $125.1m a year ago and $45.3m last quarter to $31.3m. Free cash flow was hence $274m. For the first three quarters of fiscal 2023, Skyworks has generated record free cash flow of $1.35bn and record free cash flow margin of 38%.

During the quarter, Skyworks paid $98.7m in dividends and repaid $500m of its 2023 notes at maturity.

Overall, cash, cash equivalents and marketable securities hence fell from $1061.4m to $739.5m.

Quarterly business highlights

In mobile and Internet of Things (IoT) applications, Skyworks:

  • secured 5G content for Android smartphones across all tiers with Google, Samsung, Oppo, Vivo and Xiaomi;
  • delivered Sky5 platforms for the 5G broadband customer premise equipment (CPE) of leading North American carriers;
  • supported the launches of Wi-Fi 7 tri-band routers with NETGEAR and TP-Link;
  • powered Bell’s Wi-Fi 6E Giga Hub home gateway;
  • continued to gain design-win momentum with its 5GHz cognitive wireless audio system-on-chip solutions, supporting Samsung’s Q-Symphony soundbars.

Across infrastructure and industrial applications, Skyworks:

  • enabled 5G small-cell deployments with a top North American operator;
  • ramped timing solutions for artificial intelligence (AI) data centers at a leading cloud provider.

In automotive applications, Skyworks:

  • captured designs for telematics applications across a broad range of domestic and China-based OEMs;
  • extended its engagements by leveraging its power isolation portfolio with a North American electric vehicle (EV) supplier.

“Our targeted investments in next-generation technologies are generating solid momentum going into the second half of calendar year 2023,” reckons chairman, CEO & president Liam K. Griffin.

Revenue to grow 13% in September quarter

For fiscal fourth-quarter 2023 (to end-September), considering the seasonal impact from major product launches, Skyworks expects 13% sequential revenue growth to $1.19-1.24bn. However, reflecting the cyclical impact of lower factory utilization while the firm is reducing its internal inventories, gross margin will remain 47–48%.

Operating expenses are expected to be $178–182m, down 6.5% year-on-year as the firm continues to optimize operating efficiencies while making the necessary investments in technology and product development “to further enhance our leadership position in Mobile and drive diversification and growth in our Broad Markets business,” says senior VP & chief financial officer Kris Sennesael.

Diluted earnings per share is expected to rise 21% sequentially to $2.10.

“Given our conviction in Skyworks’ long-term strategic outlook and consistent strong cash generation, we announced a 10% increase in our quarterly dividend to $0.68 per share [from $0.62 per share],” says Sennesael. The dividend is payable on 19 September to stockholders of record at the close of business on 29 August.

See related items:

Skyworks maintains strong cash flow generation

Skyworks’ quarterly revenue falls during Android-related inventory consumption

Tags: Skyworks