SWKS Skyworks Solutions
Good RF engineering, but Apple concentration and eroding pricing power mean the market's 12% growth bet looks too optimistic.
The business
Skyworks designs and manufactures RF front-end chips (power amplifiers, filters, switches) that let smartphones and other devices connect to cellular and wireless networks. It sells primarily to handset makers, with Apple historically representing the majority of revenue, plus smaller broad-markets segments (IoT, auto, infrastructure).
Quality gate · 73/100
Moat & management
| Moat | narrow moat |
| Source | intangible |
| Trajectory | eroding |
| Management | adequate |
RF filter/PA design and process integration create real switching costs and IP barriers versus low-end competitors, but the moat is under pressure: Apple is negotiating share down and dual-sourcing more aggressively (Qualcomm, Qorvo, Broadcom, in-house efforts), and revenue has shrunk at a -9.3% 5y CAGR with operating margin compressed to 10.3% from historical 30%+ levels.
Conservative balance sheet (net debt/EBITDA 0.05) and consistent buybacks (share count CAGR -2.5%) with strong FCF conversion (1.58x) show shareholder-friendly discipline, but capital returns have not been paired with revenue growth or diversification away from Apple concentration.
Owner-earnings inputs
| Owner earnings (TTM) | 535.30M |
| Owner-earnings yield | 5.6% |
| Free-cash-flow yield | 7.0% |
| Growth used (normalized) | 4.0% |
| Market-implied growth (reverse DCF) | 12.4% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 11.4% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 556.71M | 4.0% | 499.84M |
| 2 | 578.36M | 3.9% | 466.23M |
| 3 | 600.21M | 3.8% | 434.42M |
| 4 | 622.22M | 3.7% | 404.35M |
| 5 | 644.34M | 3.6% | 375.95M |
| 6 | 666.54M | 3.4% | 349.17M |
| 7 | 688.75M | 3.3% | 323.95M |
| 8 | 710.95M | 3.2% | 300.23M |
| 9 | 733.07M | 3.1% | 277.95M |
| 10 | 755.06M | 3.0% | 257.04M |
Key risks
- Extreme customer concentration in Apple, which is actively diversifying its RF suppliers and pushing for price concessions
- Commoditization of RF front-end modules compressing margins structurally, not just cyclically
- Highly cyclical smartphone unit demand with limited pricing power in downturns
Catalysts
- Recovery in smartphone upgrade cycles and content growth from 5G/Wi-Fi 7 complexity
- Diversification into broad markets (auto, infrastructure, IoT) reducing Apple dependence
- Continued buybacks at depressed valuations shrinking share count
Recent news
score · 8 articles
- Earnings To Watch: Skyworks Solutions (SWKS) Reports Q2 Results Tomorrow
- Skyworks to Report Q3 Earnings: What's in Store for the Stock?
- Zacks Industry Outlook Highlights Skyworks and RF Industries
- 2 Radio Frequency Stocks to Watch From a Prospering Industry
- Skyworks Solutions (SWKS) Expected to Beat Earnings Estimates: Can the Stock Move Higher?
- Intel and AMD Get AI Earnings Setup
- Will Skyworks (SWKS) Beat Estimates Again in Its Next Earnings Report?
- What Skyworks Solutions (SWKS)'s Q3 2026 Earnings and KeyBanc Downgrade Mean For Shareholders
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~12%/yr owner-earnings growth over 10y (reverse DCF); model credits 4%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.