In the middle of that technology is Irvine’s Skyworks Solutions Inc. (Nasdaq: SWKS). Its stock has more than doubled in the past year to a market cap topping $30 billion, making it the third most valuable publicly traded company based in Orange County.
“We think the stock outperformance is based on the continued anticipated rollout of 5G, with 5G phone volumes expected to more than double this year versus last,” Robert W. Baird analyst Tristan Gerra told the Business Journal.
“Skyworks is a primary beneficiary of this trend.”
Late last week, the company said it will acquire the Infrastructure and Automotive unit of Silicon Laboratories Inc. (Nasdaq: SLAB) for $2.75 billion.
Skyworks said it’s a nearly $20 billion market opportunity as it will accelerate expansion into the industry’s most important growth segments, including electric and hybrid vehicles, 5G wireless infrastructure and smart homes, among other areas.
“By leveraging our global sales channels, operational scale and deep customer relationships, Skyworks is well-positioned to drive above-market growth, while diversifying revenues, expanding margins and delivering strong returns in earnings and cash generation,” Skyworks Chief Executive Liam Griffin said in a statement.
Some 350 employees, including the senior management team of the business, are expected to join Skyworks upon completion of the transaction.
The deal adds to a busy time for the chipmaker, which is expected this year to see sales jump 46% to $4.9 billion.
One of the key reasons is that half of its sales go to tech juggernaut Apple.
“It has a lot to gain as iPhone fans purchase a new device with a 5G connectivity chip,” according to an analysis last week in the investment site Motley Fool. “It’s won some other design contests for other tier one smartphone makers that could send sales soaring higher for the rest of the year.”
Last week, Apple introduced a colorful new iMac, an updated iPad Pro with 5G and a refreshed Apple TV 4K with a brand new remote. The newest versions of the iPhone and Apple Watch are expected later this year.
Gerra noted that Skyworks’ Broad Markets business should continue to benefit from the ramp of 5G in non-smartphone applications and 5G base stations.
Skyworks is one of three 5G stocks “to buy before they take off again,” the Motley Fool website said.
The Conexant Connection
Skyworks can trace its history to Conexant Systems Inc., a Newport Beach-based company that reported $1.1 billion in sales for fiscal 2001 and once competed against Broadcom. In 2002, Conexant’s wireless communications business merged with Alpha Industries to create Skyworks. Last year, it moved its headquarters from Massachusetts to Irvine.
It employed 10,000 as of Oct. 2, including 7,900 outside the U.S., with large labor forces in Mexicali and Singapore. It employs about 455 at its 218,500-square-foot Irvine headquarters, which includes a design center.
The company is known for specializing in radio frequency chips that manage wireless connections in smartphones and other wireless devices.
“We are connecting everyone and everything, all the time,” the company declared on its website. “As the demand for ubiquitous, ‘always-on’ connectivity increasingly expands, our innovative, high performance analog semiconductors are enabling breakthrough communication platforms from global industry leaders—changing the way we live, work, play and learn.”
Its chips, which have won several industry “breakthrough awards,” can be found in previously unimagined applications within the automotive, gaming, and wearable markets, its annual report said.
Besides Apple, other key customers include the who’s who of the technology world, including Google, Samsung and Qualcomm. Its slight 0.6% decline in fiscal 2020 revenue was caused by one of its customers, China’s Huawei, being banned by the U.S. government.
In January, Skyworks said it expected second-quarter revenue to be more than 45%, above the same period a year ago. The average estimate by analysts is for a 50% jump to $1.15 billion; the company reports second-quarter results on April 29.
“We’ve only moved about 220 million units of 5G phones,” Griffin told CNBC’s Jim Cramer in a February interview.
“By 2026, that number could be at least 3.5 billion. You’ve got a tremendous tail here.”
