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Skyworks Trims Apple Dependence With Acquisition

Chipmaker Skyworks Solutions Inc. in Irvine is predicting a record year as it seeks more revenue beyond its mainstay customer, Apple Inc.

Liam Griffin, chief executive and president  of Orange County’s third-most valuable publicly traded company, told analysts on an April 29 conference call the company is pursuing “revenue diversification” along with its emphasis on super-speed 5G communications.

In a key move in that direction, Skyworks said late last month it had agreed to acquire the infrastructure and automotive chip unit of Austin, Texas-based Silicon Laboratories Inc. (Nasdaq: SLAB) for nearly $2.8 billion. Skyworks said it expects the purchase to be “immediately accretive,” or incrementally value-adding. The transaction is set to close by the end of September.

The company said the acquisition is a nearly $20 billion market opportunity that will accelerate its expansion into the semiconductor industry’s most important growth segments, including electric and hybrid vehicles, industrial and motor control, power supply, 5G wireless infrastructure, optical data communication, data center, automotive, smart home and other applications.

In addition to those new opportunities, the deal “could reduce Skyworks’ dependence on Apple,” noted an analysis on investor website The Motley Fool.

Apple’s efforts to make its own chips and lessen its own reliance on outside suppliers could “still be years away—if it happens at all. But Skyworks is smart not to wait around to find out,” according to the Wall Street Journal.

Record Year Prediction

Meanwhile, Skyworks presented record-high quarterly earnings that included a lower percentage of overall revenue coming from Apple.

Skyworks said it obtained about half of its revenue from Apple (Nasdaq: AAPL) in the second fiscal quarter­—which ended April 2—down from aprox- imately 70% in the previous quarter.

The company said second-quarter revenue was $1.17 billion, up 53% year-over-year and ahead of analysts’ estimates of $1.15 billion. Net income was $325 million during the three-month period, up almost 80% from the same quarter a year ago.

Griffin said the company is “on track to deliver record results for fiscal 2021.”

Shares Increase

Skyworks’ stock has surged in the past year to a market cap that has been hovering around—and occasionally topping—$30 billion. It’s the first locally based technology company to hit that valuation mark since Broadcom, which in 2016 was bought by Avago for $37 billion.

Skyworks, which moved its headquarters designation from Massachsetts to Irvine last year, 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.

“Skyworks is gradually transforming into a diversified semiconductor company enabling RF (radio frequency) connectivity and Internet of Things,” analyst Rick Schafer of Oppenheimer & Co. said in an April 30 research note.

He believes Skyworks “will continue to gain content and share in wireless devices and build on its strong systems-level position with smartphone OEMs (original equipment manufacturers).” 

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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal

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