Year-over-year (Y/Y) growth numbers were noticeably absent from Skyworks’ fiscal second quarter (Q2) earnings release and call. The focus was on the design wins that will lead to strong growth during the second half of the year and beyond. That’s not a reflection of poor execution, rather the weak mobile market in China on top of two quarters of soft iPhone sales — primarily in China.
Skyworks’ Q2 revenue was $810.4 million, down 11 percent Y/Y and 17 percent sequentially, the second sequential quarter of a Y/Y decline. Despite the slump, Skyworks delivered a very profitable quarter: 29 percent GAAP operating margin, $1.47 non-GAAP diluted earnings per share (EPS) and ending the quarter with no debt and some $991 million in cash, cash equivalents and marketable securities.
Broad Markets Growing
Fortunately, Skyworks’ portfolio of products for what it calls broad markets is growing at approximately 10 percent Y/Y, which Kris Sennesael, Skyworks CFO, expects will hold for the full fiscal year. The segment contributed 33 percent of the quarter’s revenue ($267 million), compared to 27 percent in Q1 ($262 million).
Skyworks groups the following markets into broad markets: wireless infrastructure, Wi-Fi infrastructure, IoT, automotive, defense and non-RF products. The company claimed several design wins in the segment during Q2, including:
- Isolators for 5G massive MIMO base stations at Nokia and Ericsson.
- WiFi 6 platform sockets at Aruba, Asus, Cisco and Netgear.
- The first commercially available 5G indoor access point.
- C-Band filters for aerospace and defense.
Liam Griffin, Skyworks’ CEO, is bullish about the second half of the calendar year, expecting continuing growth in broad markets and recovery of the mobile segment. He noted signs of improvement in China and alluded to significant “known design wins” in mobile, which Sennesael said are with “multiple large customers.” This is reflected by Skyworks’ increasing inventory, building for the product ramps scheduled during the second half of the calendar year.
For the June quarter, Skyworks estimates revenue will be between $815 million and $835 million. The middle of the range represents around 2 percent sequential growth, yet still down 8 percent Y/Y.
Now with an internal BAW filter capability complementing the company’s SAW and TC-SAW technologies, high volume assembly/test, a design approach that enables the flexible integration of components and consistent execution, Skyworks seems well positioned to remain a leader in the sub-6 GHz mobile segment.