Steady Skyworks keeps losses to a minimum
Skyworks Solutions, the Massachusetts-based manufacturer of GaAs devices, shrugged off the impact of the global recession in the opening quarter of 2009.
The company delivered revenues of $173 million in the March quarter, $5 million higher than previously forecast, swinging to a net loss of $4.6 million.
But in the context of the dramatic slowdown in the mobile handset market, which represents around three-quarters of Skyworks sales, the firm s "fab-lite" manufacturing model appears to be paying dividends.
Skyworks CEO David Aldrich told investors that the company was gaining market share and, like other GaAs companies, benefiting from solid demand for high-end handsets that require better RF performance and therefore higher III-V content.
Samsung, Sony Ericsson and Motorola all accounted for more than 10 percent of Skyworks sales in the March quarter, with LG and Nokia both close to the 10 per cent figure.
Nokia is now beginning a ramp-up of phones based on an Infineon chipset in which Skyworks is specified, suggesting that Skyworks is gaining market share at the world s leading handset company.
Currently featuring in less than 10 per cent of all Nokia handsets produced, Skyworks anticipates that this figure will rise sharply over the next couple of years as the Finnish firm diversifies its supply chain to include Qualcomm and Broadcom chipsets.
Skyworks is appearing to succeed with the diversification of its own applications base, too.
Sales for "smart meter" applications, which help to improve power control across the electrical grid, are at an early stage now, but with Skyworks in a leading position already, could result in very large volumes in the next few years.
The company estimates that about 150 million of these meters will be needed in the US by 2012, each with the potential to include between $3 and $6 worth of Skyworks parts. Aldrich described the application, which offers healthy profit margins, as "recession-proof".
Similar roll-outs are expected in Europe and China, opening up a substantial new area of business (see related story) that should account for about one-tenth of Skyworks revenue by the end of next year.
By then, Skyworks should have brought its 6-inch wafer facility up to speed, offering greater potential to cut chip manufacturing costs.
The company out-sources epiwafer production to Kopin, and also uses the AWSC foundry in Taiwan, which currently produces 10-15 per cent of Skyworks wafer volumes.
With good penetration in the emerging 3G market in China, and a slot in what it described as "an increasingly popular e-book reading platform" - thought to be Amazon s Kindle - Skyworks executives are confident of sailing through what Aldrich called the "choppy patch" that the handset market was experiencing.
CFO Don Palette forecast 5 percent sequential sales growth in the current quarter to $182 million, along with a return to profitability.
