Skyworks moves up a gear with 3G traction
Skyworks Solutions has recorded $175.1 million revenues, and a profit of $16.8 million in the third quarter of 2007, beating analysts earnings estimates by nearly 20 percent.
The Woburn, Massachusetts, RFIC maker s profit has jumped from $3 million in the same period last year, and the company is confident that it will continue this trend, by increasing sales by 6-10 percent over the next three months.
Talking about the prospects in a conference call, Skyworks president and CEO David Aldrich was upbeat, feeling that the handset amplifier market was changing in his company's favor.
“From a market perspective, media-rich EDGE, W-EDGE 3G wideband CDMA wireless platforms are driving overall unit growth, and in 2008 are expected by many to be the majority of the more than a billion cellular handsets we'll ship as an industry.”
The complexity of amplifier modules in these platforms comes at a price, and the benefit this will bring to Skyworks balance sheets was met by Aldrich with understandable enthusiasm.
“The transformation from a voice-centred business to multimedia devices is finally a reality in our industry,” he said.
Analyst Aaron Husock, of Morgan Stanley, agreed with Aldrich, saying, “Skyworks design win activity highlights increasing traction in the move toward more integrated power amplifiers and 3G, both of which offer meaningfully higher dollar content per handset.”
Finding the right direction
Currently Skyworks claims each of the top five handset makers as a customer, with its previously small collaboration with Nokia looking likely to expand thanks to a design win which is moving into production later this year, according to analyst speculation.
The move to 3G narrows down the field of suppliers who can provide the technology, giving Skyworks more opportunities with different handset manufacturers and the hope of an almost unheard-of flat, or upward, trend in average prices.
“It is a very, very small, we think elite, group of folks, who can compete,” explained Aldrich, “so therefore there should be much less long-term price pressure, more stability in this market.”
Despite being burnt by its efforts in baseband operations, its exit from which underlies the jump in profits since 2006, Skyworks is continuing its efforts to diversify beyond handsets with linear amplifier products.
Although this line makes up only a quarter of the company's existing sales it offers great potential, with a total addressable market four times that of the handset sector.
Within the past three months Skyworks has qualified linear amplifiers for an international automotive manufacturing standard, ISO TS 16949.
The certification exposes Skyworks' products to an applications market worth $16 billion, including keyless entry and GPS.
