News Article

Skyworks Cashes In On Handset Share Growth

The PA maker comes close to doubling profits and predicts continued increases on the strength of its relationships with the top five cellphone manufacturers.

The second quarter of 2008 saw Skyworks Solutions grab an even greater share of the GaAs wireless semiconductor market from its competitors, a phenomenon that it sees continuing.

This helped the Woburn, Massachusetts, company nearly double its profits for the period to $20.5 million, up from $11.4 million for the equivalent quarter in 2007.

Some of that growth comes from the acquisition of Freescale's GaAs business, which has positioned Skyworks as the number one power amplifier (PA) supplier to Blackberry maker Research in Motion. Nevertheless, increased sales elsewhere also helped the company beat its own guidance to record revenues of $215 million, a 23 percent gain year-on-year.

“Our performance represents further progress towards realizing our stated vision of becoming the worldwide leader in mobile connectivity semiconductor solutions," said CEO David Aldrich.

With that success behind it, Skyworks' optimism could not be restrained as it predicted further sales growth in the third quarter, setting a $225 million target.

Aldrich claims that Skyworks is unique in counting each of the top five handset makers as customers, and these look to be a major driver in the chipmaker s growth.

Currently Samsung and Sony-Ericsson are the only two companies that account for more than 10 percent of Skyworks revenues. The company says that ramps across the phone manufacturers will mean that four of them will contribute a 10 percent-plus proportion of its sales by the end of 2008.

“The market s growth needs are intersecting with what Skyworks does well, and therefore we re capturing share in a growing market," said Aldrich.

As well as strengthening its hold with key customers, another important factor in Skyworks recent success is improved production efficiency. The latest quarter saw the company hit an operating margin of 40.6 percent, up from 38.8 percent for the same period last year.

The company s shift from 4-inch to 6-inch GaAs wafers in HBT manufacturing is an important factor in this continuing improvement. That shift is ongoing at the Skyworks Newbury Park fab and is due for completion in the second half of 2009.

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