Skyworks confident of strong finish to 2005
RFIC and module maker Skyworks Solutions says that cellphone handset sales will bounce in the second half of 2005 as the consumer uptake of 3G technology gathers pace after a slow start.
After registering a 4% year-on-year increase in quarterly revenue in the seasonally-weak post-holiday period, the Woburn, MA, company predicted that between 725 million and 750 million handsets will be sold in 2005.
Despite the slower-than-expected initial uptake of 3G products, Skyworks CEO David Aldrich said that the penetration of top-tier phone vendors such as Motorola and Nokia into China would more than compensate.
A key target for the company now is to increase the gross margin on its products as it simultaneously looks to build dollar content per phone through the integration of different functions.
One example of this is the firm's progress with Sony Ericsson, which Skyworks now boasts as a 10% customer along with Samsung and Motorola. Previously, Skyworks supplied Sony Ericsson phones with a power amplifier at a cost of $1.50, but the handset maker has now switched to using a front-end module that sells for $2, but which reduces the phone's overall bill of materials.
Skyworks is also focusing on integrating new filter technology, specifically bulk acoustic wave (BAW) filters, in future products. Estimating that around 2.3 billion filters were used in cellphone handsets in 2004, Aldrich said that he expects the market share of BAW "“ currently very small "“ to rise dramatically as advanced, multi-band phones proliferate.
Having recently invested in increasing HBT capacity at its Newbury Park facility, Skyworks is also looking to reduce GaAs wafer costs with a view to improving margins.
As a result of the expected second-half bounce and improved margins, Skyworks is expecting its operating profit to improve 25% sequentially.
For the quarter that ended April 1, net profit came in at $1.2 million, compared with a net loss of $9.4 million in the equivalent period last year.
