Skyworks at KeyBanc Forum: Strategic Expansion Beyond Mobile

On Tuesday, 12 August 2025, Skyworks Solutions Inc (NASDAQ:SWKS) took the stage at the KeyBanc Capital Markets Technology Leadership Forum. CEO Phil Brace outlined a strategic vision balancing core mobile strengths with diversification into non-mobile sectors. While the company faces challenges like customer concentration and content losses, it remains optimistic about growth opportunities in WiFi, automotive, and industrial IoT.

Key Takeaways

• Skyworks aims to diversify revenue streams beyond its large mobile customer base.
• The non-mobile sector, including automotive and IoT, is a $1 billion business with higher margins.
• The company is investing in WiFi 7 and early WiFi 8 technologies to drive future growth.
• Factory consolidation is underway to improve cost efficiency.
• Skyworks is focused on strategic M&A to enhance its technology portfolio.

Financial Results

• Customer concentration remains high, with a significant portion of revenue from a major mobile customer.
• Non-mobile business, valued at $1 billion, enjoys higher-than-average gross margins.
• Skyworks’ Android business generates $100 million per quarter, with full RF content for a major customer.
• Automotive revenue stands at $60 million per quarter.
• Content in next-generation devices is projected to decrease by 20% to 25%.

Operational Updates

• The mobile sector exceeded expectations, though content challenges persist.
• Broad markets, including WiFi and automotive, show strength.
• Channel inventories are low, but lead times have lengthened.
• Factory consolidation aims to leverage fixed costs and reduce capital expenditure.
• WiFi 7 adoption is in early stages, with increased RF content compared to previous generations.

Future Outlook

• Mobile growth is expected from increased refresh rates and RF complexity.
• Skyworks plans accretive, technology-adjacent acquisitions to diversify revenue.
• WiFi 8 is anticipated around 2028-2029, with more RF content.

Q&A Highlights

• Skyworks is taking steps to regain mobile market share through engineering improvements.
• The company remains disciplined in its approach to the Android market.
• Operational expenditure growth is expected to slow down.

Readers are encouraged to refer to the full transcript for a detailed understanding of Skyworks’ strategic direction.

Full transcript - KeyBanc Capital Markets Technology Leadership Forum:

Unidentified speaker: Great. Well, good afternoon, everybody. Thanks for joining us. We’re pleased to have Skyworks join us this afternoon, and we’re happy to have Phil Brace, recently appointed CEO, with us. Welcome, Phil.

Phil Brace, CEO, Skyworks: Great. Thank you. Thanks for having me.

Unidentified speaker: Great. So Phil, you’ve been CEO of Skyworks for about six months now. Obviously, it seems like you probably had a good chance to kind of assess the attributes of the company. I’m just wondering if you could just give us your perspective of what you feel the company’s strengths are and where do you see opportunities for improvement?

Phil Brace, CEO, Skyworks: Yeah, it’s great. I mean, you know, one of the first things that really impressed me as soon as I got there was the depth of the engineering talent. You know, I really think we’ve got some of the smartest RF engineers on the planet and that’s a really good spot to build from. And we have just very core deep technological expertise across a wide range of products and platforms spanning multiple generations. And so that gives me a confidence lot for where we’re going in the future.

Unidentified speaker: Great. I know you talked about some of the things that you’re looking to address, but I’m wondering if you could just kind of articulate your strategy of how you plan on turning things around maybe in a little bit greater detail. I know you mentioned some things in terms of addressing customer and product diversification. But maybe if you could lay things out a little bit more in detail for us that would great.

Phil Brace, CEO, Skyworks: Yes. Obviously, you step back and look at the company, we’ve got a company that’s really positioned at the center of the wireless space, right? And obviously, we’ve got a large concentration customer, very large customer. We’re highly concentrated in the mobile space. Someone joked to internal staff meeting the other day, happiness is an upward sloping line.

And so I think to the extent we’ve got some content that hasn’t been upward sloping, I think we’ve got to turn around the content space. And how do we do that? We put the best engineers and we work on it. We’re competing for a wide range of sockets. I feel good about where we are.

Having said that, it’s it’s highly competitive and we just need to continue to execute on that day in and day out. You know, when we look broadly, right, we’ve got a fantastic platform beyond the mobile handset that I think is is really underappreciated, right? We’ve got we look at our nonmobile business, right, it’s about 1,000,000,000 point dollars business, higher than corporate margins, higher than average corporate gross margins, growing nicely. We’ve got WiFi tailwinds, auto tailwinds, industrial IoT tailwinds, timing power products. I think it’s a very diverse business and has a lot of interesting technology and a lot of secular tailwinds.

So I’m feeling pretty encouraged about that. So the internal kind of mantra at the team inside is you got to walk and chew gum at the same time. You got to walk, execute and deliver on our mobile products, continue to earn the business there and then chew gum, how to continue to grow this business outside the mobile space. And we’ve got to really increase some focus on that.

Unidentified speaker: Great. That makes a lot of sense. One of the questions that I’ve been getting a lot from investors in general is just kind of the impact on kind of near term earnings results related to kind of pull ins related to tariffs. I think one of your peers who also supplies to your large customer had come out and basically said that a lot of the upside in the near term were due to pull ins and kind of talked about the second half being a little bit more sub seasonal. How are you kind of assessing and looking at this pull in dynamic in your results?

Phil Brace, CEO, Skyworks: Yes. If we just I’ll answer the question very specifically, and then we’ll step back and zoom out a little bit. Just very specifically, we are seeing broad strength across the board. Mobile has come in stronger than expected. Book to bill is stronger expected.

Channel inventories are low. We’re seeing lead times longer than they have been. Inventory is low. And I think you heard our largest customer had a call. They talked about very strong iPhone 16 demand, which is where we’ve got good content.

So we’re seeing better units than expected, better sell through than expected. Our customers don’t tell us why they’re ordering. All we can do is kind of keep the inventory low and manage that, that’s what we can do. And I think we came out with a very strong earnings report, a very strong guide. One thing I’m just trying to remind people here, the conference I’m going through, when we came out in February, all of the kind content losses and all this stuff were already baked into the numbers, right?

They were already kind of set them low. So to some extent, they’re doing a little bit better than expected and that’s some tailwind. So that’s great. We’re just going to continue to try and execute. But the way we see it right now is inventories are low, strength in mobile, strength in broad markets.

We’re just keeping an eye on it. But for right now it’s it’s solid.

Unidentified speaker: Great. Yeah, that was actually my other question is you kind of addressed it, right? You put out really strong numbers and results and guidance. It didn’t seem to suggest you’re losing share, but obviously you had kind of talked about how it already encapsulates it. But just at a high level, are you able to just articulate kind of how much share you’re losing this year and maybe just talk about kind of share relative to the two platforms that are going to be ramping?

Phil Brace, CEO, Skyworks: Yes. I mean if you look at what we talked about in February, we talked about content in next generation should be down 20% to 25%. The reality is we don’t exactly know. That’s our best guess based on what it is. Because what happens is it’s their discrete decisions on what silicon they put in what models of the phone, and it depends on the sell through of the models and what’s happening.

So in this particular quarter, the sell through of the iPhone 16 was where we happen to have high content was better than expected, and that seemed to work out pretty well. But that’s kind of how we do that. When we look going forward, right about how I think about the business going forward, I think there’s four major tailwinds that we have. And I’ll talk about the headwinds too. But the four major tailwinds, first, you look at our largest customer having an installed base of over a billion units.

It’s the longest refresh rate in the history of the product. It’s over four and a half years now. Just a small increase in the refresh rate results in hundreds of millions units that will float everyone’s boat. And the latest report from our largest customer suggests that some of that’s happening. Last big cycle was an iPhone 12.

Okay. Is it unreasonable to assume we’ll have a little more tailwind on that? So that’s item number one. Item number two is we got to compete and win for the sockets we’re competing for. Item number three is we should have a tailwind as they move more to the internal modem because we’ve got more sockets come available on the MIMO side.

And long term, we’re seeing more complexity in the RF side coming on the transmit side. And, oh, why is that, you may ask? Well, there’s two reasons to that. One, more people are uploading things, so there’s a little bit more focus on the upload side. And the second thing is some of the new frequency bands are higher frequency.

The good news of higher frequency is more data, more bandwidth. The trade off for that is shorter distance to the tower. The way you compensate for distance to the tower increase the transmit complexity, which should be favorable for us. So look, we’ve got four major things that should help us. Of course, it’s a highly competitive market and we can we compete for it every single year.

And you know, it’s the analogy I’ve been using with the investors, it’s like the Super Bowl. You you hire super, super talented engineers and they just love the fight and it’s an aggressive competitive thing and you play to the Super Bowl and if we win or lose, the next morning you’re up in pads practicing again. And you gotta love that environment and that’s just that’s the environment we play in. And so that’s that’s what it is. And that’s why I’m trying to foster that kind of edginess, competitiveness.

I I like that actually. It’s okay. Pick up, you know, it’s like a basketball team. Pick up the ball. Let’s go.

Let’s play again. Right? I like that. We’re not down to our dumps. We’re not like, let’s go.

Let’s go freaking win.

Unidentified speaker: Okay. Thanks for kind of laying that out. That was very helpful. Maybe I’m just wondering if you could just lay out what are the steps that you’re taking to ensure that you’re going to win back share next year. And I know obviously no decisions have been made.

Typically it gets made later in the year. But what’s your level of confidence of being able to win back share next year?

Phil Brace, CEO, Skyworks: Look, I feel in general, if you ask me what are the things I think we could do be doing better long term, I think we could probably doing be doing better long term doing more upfront engineering. I think right now we probably have more than I would like of just in time engineering, right? And if you think about the two buckets of engineering, you have core like fundamental technology development, right? Transistors, filters, resonators, and then you have the people that integrate all those things into products. We’ve got both those trains running pretty much in parallel.

I’d like to be able to get to the point where I’ve got more upfront stuff, so it’s not quite as and that will take a little bit of time, think. But overall, I’m feeling good about where we are. I’m happy with the team we’ve got in the field. It’s a competitive a competitive environment. We’ll just have to see where it plays out.

Right.

Unidentified speaker: You know historically as you know the company has spent a lot of time focused on diversification, on M and A as you know. Broad box is now 40% of your revenues, right? Do you think this increased focus on the diversification had led to some of this share loss for your customer? You talked about the need to walk and chew gum. How do you kind of balance that plan going forward?

Will you continue to invest on both fronts? Or are you going to focus more on mobile, at least in the near term, to win back share?

Phil Brace, CEO, Skyworks: No. Actually, I think that I think my I think that was the story coming into that. I actually think it’s the other way around. I actually think the gravity of that largest customer caused us not to focus as much on some of the other customers. I think that’s the most underappreciated story of the company.

I mean it’s a 1,000,000,000 point dollars business that’s growing nicely in great customer segments. I mean Tesla, SpaceX, Juniper, Cisco, you you name it. And we have a bunch of interesting technologies that that alone is an interesting business that’s growing. And I don’t think we do a good enough job either getting out there with our customers talking about it as much, talking to the industry about it as much. And for me, it’s a little bit of the other way around.

I I don’t think that having any less focus on that, I don’t think that would have changed the outcome. Because if you look at the outcome of what happened on the last cycle, another sports analogy is you have the best part, you win. You have a split part, it’s a jump you know, a jump ball, it’s a split. And you have a bad part, you lose. Okay.

In that particular case, we had a competitor that had a good part and so they split. It’s gonna that’s the nature of the game. That’s what they’re going to do. So I’m not sure any less focus on that. As a matter of fact, I’d argue that we should be accelerating more in that space while continuing to focus there.

So I don’t buy that thesis. I think we’re going to focus on both.

Unidentified speaker: Okay. And then going forward, to what extent are you going to be focused on M and A and what’s your kind of framework?

Phil Brace, CEO, Skyworks: Yes. I mean, look, I think that if you look just zoom back out, I mean, obviously our customer concentration, our concentration in one particular handset space results in a depressed multiple compared to others given that potential volatility. So clearly increasing our diversification is an important factor of us. And I think that just in general, it’s going to be very difficult to really move the needle significantly on that just organically. So it’s likely there’s going to be some M and A in a higher order space.

A lot of people are asking me about what my priorities are and those kinds of things. I would say in general, I’m going to look for things that are accretive, things that are technology adjacent and probably have a different profile that can help dampen some of the volatility associated with some of the handset business we’re in. So that might suggest that I’m probably not looking at consumer oriented spaces as an example. You know, another area that gets a little bit tricky is today, our data center exposure, if you think about it, is limited to not limited to, we have timing products that go in there and we have power products that go in there via Delta. So power supplies and timing products.

And we are seeing some growth in there as they go to like 800 gig and 1.6 terabytes lower, lower power. I think there’s some tailwind there, but it’s still a very small business. Other companies that have higher concentrations in that space are trading at incredible multiples that would be really difficult for me to acquire and make it accretive. And so I’m going to be focused on things that are I can do accretively, technology adjacent, sticky, have a different revenue profile than where I’m at. And that’s probably how I look at that.

Unidentified speaker: Okay. What about would you consider M and A within mobile and potentially within RF?

Phil Brace, CEO, Skyworks: Yes. I got some questions around consolidation in the industry and things like that. Look, think you could argue just from the industrial logic perspective, you could argue that you know four years ago five years ago, you know five gs was ramping and four gs was going crazy and five gs was ramping and there was all the China customers. And I think, you know, I’m looking at Raji, we probably had a billion and half dollar business in China alone, never mind everybody else. So I think you could argue that there’s some industrial logic for some consolidation in the space.

Having said that, a lot of things need to be conditions need to be right in order to make that happen. You’ve to support the customer, antitrust environment, you got to make sure there’s just a lot of pieces. So I think from an industrial logic perspective, you could argue it makes sense. Is it actionable? I think that remains to be seen.

Unidentified speaker: Obviously, there were headwinds with your China Android business. I think they’re largely out of the numbers at this point in time. What do you think about just the sustainability of the remaining Android franchise going forward? Is that something that you think you can grow?

Phil Brace, CEO, Skyworks: Yes, it’s a good question. I think Android right now is about $100,000,000 a quarter for us. The biggest growth this past quarter has actually been a ramp at a large Mountain View based customer for which we have 100% RF content. And that particular customer, Pixel, I mean they like having the Halo phone because they don’t want the operating system just to be relegated to the low end phones. So they’re very focused on that.

The reviews of that phone have been great and we’ve got great engagements and great focus there on that. That’s probably our strongest Android engagement. We obviously have a presence still in the Korean phone manufacturer and then a little bit of dribs and drabs with respect to the Chinese players. We’re going to be disciplined about how we focus Those are not the most economically attractive things to do.

And so there’s an opportunity cost. There’s a balance of do we have the capacity? Do it does it fit right? We’re just going to be disciplined about how we do that. So I think this going into next quarter, Android should grow again, probably not at the same rate it grew this past quarter just because of the initial ramp.

Unidentified speaker: Are there any questions? So switching to broad markets. What are can you just kind of walk us through and just highlight what the primary growth drivers of that broad markets portfolio is?

Phil Brace, CEO, Skyworks: Yes. I mean if you look at the big drivers, WiFi seven. That’s probably our biggest business. That’s earliest in the ramp in terms of the adoption rate. We’re starting to see that being widely proliferated across both the enterprise and consumer segment.

That’s good from a units perspective and adoption perspective, but also content perspective. It’s about 20% to 2015% to 20% more RF content for WiFi seven than it was the prior generation. So we’ve got a unit tailwind and a content tailwind that’s happening there. Automotive right now is interesting too. Automotive is about six sixty million dollars a quarter for us.

And really, what we’re seeing there is, if you look out in time, okay, more vehicles need to be connected wirelessly via five gs for infotainment, over the air updates, vehicle to vehicle communication, WiFi, Bluetooth. And we’re actually seeing some pretty good traction on that front, right? The IoT space and the industrial space is an area where we’ve actually seen some inventory digestion over the past several years. We’ve actually started to see that normalize and start to grow. So we’re feeling pretty good about those spaces right now.

Got it. What about AI and RF complexity changing and the uptick in dollar content? What does that world look like? Yeah. So when I look at that, so I think that the way that I think about that is related to the there’s two areas that it’s related to, in my opinion.

One of the areas and I just want to be clear, this is us inferring things and thinking about it, right? We don’t have direct conversations with a particular customer, but that for obvious reasons. But when you think about just long term trends, we’ll talk about the transmit side for a second. So the idea that you are transmitting more data up there now, the transmit is actually a very power hungry part of the phone. And so you can imagine that how to transmit more and do it in a power efficient manner requires more complexity on the RF side and may include things like for years on the receive side you’ve had multiple antennas MIMO.

You may start seeing some of that on the transmit side, increased power, things like that. So that’s and there’s another factor there as well. It has to do with the frequency bands. As you go higher in frequency, you get more bandwidth, so you can download and upload more stuff. The trade off for that is it’s you can’t go as far from the tower.

So the way you compensate that is by having more transmit capability in the phone itself. Now the customers aren’t going to want decreased battery life, so there’s going be lots of complexity for how to get that transmit done right, keeping the battery life the same. And so those would be some areas. And then, frankly, as the inexorable march of integration and performance continues to be there, right? As the cameras and the processors and the displays get bigger and more powerful, it’s not like people are getting tolerant with less battery life.

So you’ve got to continue to provide that level of functionality and more in highly complex packaging, and that’s where we think we’ve got an advantage as well. If you’re successful in your core markets, do you think that that opens up new applications that maybe you guys haven’t even been in? Absolutely, it does. I mean, one of the things I think about just long term is you know, when you think about go back, mean, one the I just get most excited about, I get shivers when I’m just even talking to you about this. 99.99999% of the devices connected to the Internet are connected wirelessly.

And that’s going to be true for as far as the eye can see. And there’s only a few people in the world that develop the technology we do. So, yeah. I mean, I I think we don’t even know what’s gonna happen. And that’s where the IoT comes into play, the auto comes into play, the WiFi, the devices, there seems some new talk of some new devices.

They’re not talking about plugging those in doing right? So that’s what I get excited about.

Unidentified speaker: Just a follow-up question on that is, I think historically, I I think there was a WiFi asset that you historically had tried to bid on, but you talked about all those wireless assets. Does it make sense for you to maybe kind of vertical go vertical a little bit and acquire some of these wireless radio assets to complement your RF front end out there? I mean, there’s a lot

Phil Brace, CEO, Skyworks: of different protocols and I’m going to answer it in a tongue in cheek manner. You might imagine that since I took over, I have every single investment bank on the planet is coming through and trying to trying to pitch new ideas for me. There’s a range of ideas I’m considering. I tried to answer the M and A one the best I I could before. So lots of different things on that.

I’m just trying to keep keep close to the core technology, focus on making it accretive and help me diversify from my core handset base. Okay. Yes. Think most a lot of that spectrum I think they talked about I think if I’m not an expert necessarily in this field, but they talked about reharvesting some of the digital TV spectrum, which I think is lower frequency bands. And then there’s also some higher frequency bands that come available.

Look, more complexity on the RF side is definitely a tailwind for us, right? The harder it is to do, the more stuff there is to do, the better it is.

Unidentified speaker: I had a follow-up question. You talked about WiFi seven. I think on your own call that you said that you’re already starting to invest in WiFi eight. Mhmm. What what inning are we in the WiFi seven cycle?

And what’s what’s the timing for when we can expect to see kind of meaningful revenues for WiFi eight?

Phil Brace, CEO, Skyworks: Oh, I think we are in maybe the second inning of WiFi seven, maybe second inning and we’re we’re not even in spring training for WiFi eight. So, I mean, I think WiFi eight is probably ’28, ’29 and we got WiFi seven until then. Right?

Unidentified speaker: Okay. And is the expectation for WiFi eight is you’re also going to see an ASP uplift there relative to WiFi seven? Is that I

Phil Brace, CEO, Skyworks: think that remains to be seen. But I mean I think that when we look at more I mean if you look at kind of what’s happening on the WiFi side, more power, more range, more spectrum, more mesh capability, more back channel capability, I think just in general, there’s going to be more RF content there. So that would be my expectation. Still early days.

Unidentified speaker: Okay. So just maybe switching to OpEx and your op margins. It seems like you’re going be in a situation where obviously we’ll find out about next year’s smartphone towards the end of this year, but potentially you’re going be running a little bit more subscale than you historically have run. How do you kind of think about just balancing kind of the right trade off between investing for continued growth and making sure that you’re not going to lose share again versus maintaining good operating leverage?

Phil Brace, CEO, Skyworks: Yes. So you’ve seen me take some steps in the area. Again, what we have made a big investment over the past couple of years and I think that what I’ve been telling people is that we expect that rate of increase to moderate significantly. Where I am going to be focused on is key engineering talent where I think we need it. As I look at balancing that, what I’ve tried to do is you saw me take some steps in the earnings call where we consolidate some of our factories.

Basically that helps get us better better fixed cost leverage, better utilization, lower CapEx and frankly reduce OpEx over time. So we’re gonna take some steps like that. You know, to your point on the content, you know, the story I use is like a fruit tree. Sometimes in a particular season, you may not get enough fruit off that one or you may not get the same amount of fruit you got the prior year. Well, I have a choice.

I can take down the water or fertilizer, but that pretty much guarantees that I’m not gonna get the same amount of fruit next time. And there’s no other opportunity we have. So the thing you love and you hate about the industry we’re in, it’s hyper competitive. But as soon as it’s over, you suit back up and you got a chance to win it again. And look, if we go and if I don’t start changing the slope of the line, respect content, you know, over some period of time, then you start having a discussion, okay, we like losing the football, right?

We’re not making any progress despite this investment. But I think at this point now, right, this is we’re in a core space, it’s hyper competitive, we’ve got fantastic technology and there’s no other opportunity we have that can generate the returns that we have. The path to glory here is back to growth. It’s not around cutting OpEx. So

Unidentified speaker: Just a follow-up on some of the consolidation you’ve talked about, the Wolverine facility closure the Newbury Park consolidation. What’s the timing and benefit of those? And are they primarily an OpEx or COGS

Phil Brace, CEO, Skyworks: benefit? We’ll do both. I mean it will result. I mean it’s going to take a little time because and ultimately what’s going to happen is the way I would say it is apples to apples, it’s going to be a tailwind for both gross margin as a result of fixed cost utilization, lower CapEx and it allows to invest more in advanced technologies at the Woburn site. So in general, it’s going to be a tailwind.

That’s actually going to be reflected as our as we give quarterly guidance going forward. It’s going to take a while to close those factories. It don’t happen overnight. So it’ll take a little while. And ultimately, the utilization of the factory and the OpEx and the gross margins and things are going to be determined by the content wins and what we have.

So I would say it’s going to be a natural tailwind for us. And I think the way that I talk about to investors is have confidence that we’re taking steps to make sure that we are allocating capital investments appropriately to make sure that we’ve got our assets positioned the right way to try and generate maximum returns for us and our shareholders.

Unidentified speaker: Great. Thanks, Phil. Awesome. Appreciate it.

Phil Brace, CEO, Skyworks: Thank you very much.

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