Skyworks at Morgan Stanley Conference: Strategic Vision Under New CEO

On Wednesday, March 5, 2025, Skyworks Solutions Inc. (NASDAQ: SWKS) participated in the Morgan Stanley Technology, Media & Telecom Conference. The event marked a pivotal moment for the company, as newly appointed CEO Phil Brace shared his strategic vision. While emphasizing growth and diversification, Brace also acknowledged challenges such as customer concentration and competition.

Key Takeaways

• Phil Brace, the new CEO, aims to transform Skyworks into a $20 billion to $50 billion company.
• Strategic priorities include defending the core RF business and diversifying into IoT, automotive, and infrastructure markets.
• Emphasizing capital allocation balance, Skyworks plans to invest in organic growth, mergers and acquisitions, and shareholder returns.
• Key opportunities identified in the rise of AI, electric vehicles, and increased wireless connectivity.
• Brace is committed to fostering innovation and addressing competition challenges.

Introduction and Background

• Phil Brace brings over 30 years of tech experience, with roles at Intel, LSI, Seagate, and others.
• He expressed excitement about Skyworks’ technology and market potential.
• Brace aims for significant company growth, targeting a valuation between $20 billion and $50 billion.

Strategic Priorities and Vision

• Defend the core RF business by maintaining strong relationships with key customers.
• Diversify into broad markets, leveraging existing positions in IoT, industrial, and automotive sectors.
• Consider mergers and acquisitions to enhance market presence.
• Balance capital allocation between growth initiatives and shareholder returns.

Megatrends and Opportunities

• Connectivity: Anticipates growth due to more wireless devices.
• AI: Opportunities in edge computing and data center connectivity.
• Automotive: Growth in connected and electric vehicles.
• Mobile Devices: Potential for AI-driven refresh cycles and new spectrum availability.

Q&A Highlights

• OpEx rationalization: Skyworks plans to reallocate R&D capacity to new opportunities.
• Competition: Brace acknowledges potential industry consolidation and stresses defending core business.
• Automotive and industrial portfolio: Open to acquisitions but will proceed carefully.

Leadership and Culture

• New leadership provides an opportunity for cultural reassessment.
• Focus on innovation, urgency, and engagement with engineers, customers, and investors.
• Introduction of an AI Czar to integrate AI tools across the company.

In conclusion, Skyworks, under the leadership of Phil Brace, is poised to navigate market opportunities and challenges with a focus on growth and innovation. For a detailed account, please refer to the full transcript below.

Full transcript - Morgan Stanley Technology, Media & Telecom Conference:

Joe Moore, Semi Natural Analyst, Morgan Stanley: Okay. Let me just start with this disclosure. For important disclosures, please see Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep.

Thank you. I get yelled at for not reading that. So, yeah, apologize. Anyway, I’m Joe Moore, Morgan Stanley’s semi natural analyst and very happy to have with us today Phil Brace, who is the newly minted CEO of Skyworks. I would say this is actually the fifth new CEO that we’ve had at our conference.

I’m cheating a little bit with you, but you’re actually one of the legitimate Yes, I guess the half

Phil Brace, CEO, Skyworks: way semiconductor CEOs are dropping. I don’t know.

Joe Moore, Semi Natural Analyst, Morgan Stanley: I think it’s great. I think it’s a really good opportunity for people to kind of get your perspective and meet you for the first time. So we’ll keep the questions fairly high level, at least for start and then open it up. Maybe you can start if you could just give us your background on yourself, what drew you to Skyworks and kind of how you’re thinking about having this new role? Yes.

Phil Brace, CEO, Skyworks: Well, thanks for the opportunity. It’s always a pleasure to come here and meet with investors. This is actually my first, I guess, foray out. It’s week three, day three for me to do that. So it’s great to be here.

I’ve got a long career in tech. I’ve been thirty plus years. I started Intel, back when Intel was a very different company than it is now, Andy Grove, Craig Barrett, that whole regime. Lots of time in semiconductors, LSI when we sold it to Avago Broadcom, which kind of started the whole Avago Broadcom kind of role, if you will. Different tours of duty, both at Seagate then went into private equity software.

My final, I did a CEO of a company like Sierra Wireless that was actually a Skyworks customer. We ended up selling that to Semtech and I did some boards. And frankly, I got a recruiting call for this one and I immediately jumped at it. For me, this is one of the most exciting opportunities on the planet and I can talk a little bit about that why. That’s kind of where I’m at.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Yes. I mean, I guess, I like the company a lot as well, but I’m not but why do you think that? Why are you so confused for that?

Phil Brace, CEO, Skyworks: First off, I love the technology and I love the space. I mean, when you think back, like I’m old enough to remember the 14.4 BIS modems, all this other stuff. And you think about one of the things that’s enabled the world that is around us is networking technology and specifically it’s wireless technology. I mean, there are billions of devices out there. I think there’s something like 2,000,000,005 gs devices out there now.

By the end of the decade, there’ll be 30,000,000,000. It’s really complex technology. One of the things I’ve been impressed with so far is just the people I’ve met at the company are some of the smartest people I’ve ever been around. I love that. I love the complicated problems.

I like solving complex problems. This is a tough one. And I think that there’s a great setup here. I think we’ve got opportunities to earn more business. I think there’s more RF content.

I do think there’s an AI wave coming. I do think we can expand our business in the broad market space. And I just think the canvas is just completely wide open. And frankly, we’ve got a great balance sheet and a great position. So I mean, for me, this is like an instant no brainer.

How do we turn this into a $20,000,000, 30 million dollars, 40 million dollars, 50 million dollars company, right?

Joe Moore, Semi Natural Analyst, Morgan Stanley: I’m it’s great. Great. Good to hear. What is the vision here? How do you plan to steer the company?

There’s been obviously very good growth in RF, albeit customer concentration and some hiccups that we’ll talk about. But also there’s been an emphasis on building other businesses inorganically, diversification. Just where do you come down on those things?

Phil Brace, CEO, Skyworks: Yes. Well, so first off, honestly, we have to defend the castle. There’s a lot of noise around what we’re doing as a largest customer. And the thing is that’s the neighborhood we live in. You may not like it, but that’s the business we’re in.

We develop RF components, some of the best, most complex RF components in the world, and we have the best customer in the world for that. And is it a challenging customer? Absolutely. The thing is the rules are clear. You deliver the best products and you win.

The jump ball, you split and you deliver shitty products and you lose, period. And you have the chance to do that every single day. And we’ve got an edge. When we’ve met all the employees, I’ve gone around and continuing to meet them. I like the edge.

We’ve got a little edge there. So it’s like give me the ball back again, I want to go compete and win. So I like that, that’s got to be job one. Job two is look, we’ve got to diversify this company. We’ve got a tremendous broad market space.

We’ve got a great IoT edge base. We’ve got a great industrial position. We’ve got autos. We’ve got a lot of capability there. And I do think we have the balance sheet and the financial performance to continue to look at M and A to expand that business if we have to.

So priority one, defend the castle, put a few products back in our competitors’ backdoor, compete aggressively, go win and then continue to expand our business beyond that, right?

Joe Moore, Semi Natural Analyst, Morgan Stanley: Yes. No, that makes a lot of sense. I mean, I guess if the market doesn’t give you guys a multiple on the customer concentrated RF part of the business, using that then as a currency for inorganic growth can be tricky. And there’s not having a little multiple I’m sure is annoying as a CEO or CFO, but like you can actually buy back stock. I mean, there’s a lot of good things that can happen if you trade.

So how do you kind of balance those things? So like you have a currency that I think we all think is sort of undervalued on what you’re capable of doing long term using that currency to diversify in other businesses. Just how do you think of the trade offs there?

Phil Brace, CEO, Skyworks: Yes, it’s a good I mean, obviously we traded discounted multiple customer concentration as a proxy for volatility, right? People don’t the volatility. In fact, some of the volatility is displayed to hand now. So we traded this kind of multiple probably not unjustified honestly given where we are. Now having said that, we’ve got to turn that we’ve got to start turning the ship around and actually start growing and growing that business, right?

And then I think getting back to growth will help us kind of relieve some of that pressure. And you’re right, to the extent that there are lots of different properties out there that trade at tremendous multiples spread compared to where we are. So we’re going to be very disciplined about how we look at that and we’re just going to be focused on how to do that. We have actually been returning a lot of capital to shareholders, dividends, share buybacks, and we will frankly, if we don’t my goal is to continue to find things diversified, but we’ll continue to be disciplined about allocators of capital and we’ve got a financial position

Joe Moore, Semi Natural Analyst, Morgan Stanley: to do so. Great. So given you talked about a pretty diverse background,

Phil Brace, CEO, Skyworks: you

Joe Moore, Semi Natural Analyst, Morgan Stanley: come from storage, semiconductor software, IoT, all the things. What are the big megatrends that you’re looking for here? And how do you think Skyworks can benefit from those?

Phil Brace, CEO, Skyworks: Yes, I actually love like when you look at it, so some of the huge megatrends are first, you just go back to base connectivity, right? I think that goes back to the networking space. You ask yourself the question, if five years from now, do you think there are going to be more or less wireless devices connected on the planet? The only answer is more. And the only way you do that is wireless technology.

And we are one of the top handful of people in the world that can do the stuff we have. I mean, we talk about I’m talking to the engineers and they’re designing sub micro nanometer things that vibrate at 1.171 gigahertz and don’t vibrate at 1.1702 gigahertz. I mean, this shit is like black magic. It’s really complicated. It’s hard And we’re at the forefront of that.

So I love that. I mean, that is just the place you want to be, complex card stuff. The second thing is this AI, when you think about it, there’s a lot of focus on the AI that’s happening now. And sometimes the way I think about it, this is we’re focused at at the base of the tree. We’re building data centers that go off and do all this crazy stuff.

At the end, you’ve got to get the data and stuff out to people like you and me, and that’s going to be done wirelessly. So there’s a great opportunity there. Autos is another one. You look and go, gosh, I mean, I have an electric car and actually I think they kind of under market it is for me the experience is better. The technology is better, the driving experience is better and I think this is just inevitable.

And are they going to be more connected V2X communication, near field communications, Bluetooth, Wi Fi, cellular? You think about all the accesses of innovation there. But I personally think there’s a ton of tailwinds. There’s a tailwind in RF innovation. There’s a tailwind coming with AI because you look and you go today, mobile devices have one of the longest refresh cycles in the industry, four point five years.

You can imagine even taking six months off that gives us a big tailwind. We’ve got RF content with new spectrum coming. You’ve got AI, you’ve got infrastructure, you’ve got IoT edge. I mean, the number of tailwinds we have, we just have to execute and deliver and expand. I mean, it’s I couldn’t be more excited about where we are.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Yes. So you just talked about a lot of things. I’d like to maybe follow-up on a couple of the AI phone. I guess, what does that mean to you just to start it? And I think when LLMs first became a thing, people were thinking we’re going to do what we’re doing in cloud, we’re going to do that on the phone.

And then that’s kind of morphed away from that. We’re going to have different services on the phone. Now with DeepSeek, maybe if we’re coming back to that a little bit, but just how much of the innovation of an AI phone will happen in cloud? How much of it happens on the device? And then what is the ramification for the RF ecosystem if it’s on the cloud or in the device?

Phil Brace, CEO, Skyworks: Yes, I think that’s I mean, first off, we don’t exactly know how this is going to play, right? I think we are just in a I was talking to Mark earlier in the day. I actually we are in just a nascent I feel like I’m back in the 90s again with where we are in terms of innovation and what’s happening. I mean, there’s stuff going on every single day. So that’s what I said about that.

So when I look at the effect on our business, I think there’s two vectors. One, I think you could see an element where there’s more intelligence and more things happening at the edge. And I think that that will lead to an upgrade cycle and things like that, that’ll happen. I also think that even if more stuff happens in the data center, which ultimately will, right? You’ve got all these guys spending tens of billions of dollars a month on capacity and capability.

I do think that it’s going to drive up and people are going to look like your three or four year old phone now is going to look really old for where now it’s like, oh, iPhone 12 still looks fine. I think the pace of innovation is going to be there. And I think that some of that drives new RF content because they’re going to want to think about just what actually determines a lot of the RF now is transmit, right? And so when you go to new capabilities, if you’re actually uploading more stuff, boy, you actually need to actually have better transmit capabilities. So maybe there’s some new technologies, MIMO on the transmit side, watching the power down because some of the new frequencies, they’re higher frequency.

The challenge with higher frequency is lower propagation. The way you solve lower propagation is actually have higher power things in the devices itself. Well, higher power isn’t great. So how do you do that with MIMO? I just think there’s a lot of innovation that could happen there.

So I think it’s more intelligence in the device. I think it’s driving an upgrade cycle and improving RF content.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Yes, that makes a lot of sense. And then the other elements that you mentioned, you talked about some of the broad markets benefits from

Phil Brace, CEO, Skyworks: kind of

Joe Moore, Semi Natural Analyst, Morgan Stanley: the wireless ecosystem. I mean, how much of the diversification is around that? It’s not buying revenue, buying margin, but it’s buying five gs enabled capabilities where suddenly everything is connected to everything else. Is that kind of the vision for how you put these things together?

Phil Brace, CEO, Skyworks: Yes. I mean, I think look, I mean, I think what I there’s some things I really like at our core base. I like the fact we’re in the aerospace. We have unique differentiated technology. You look at our broad basis, right, there’s some businesses underneath that I really like.

I like the timing business, right? There’s a lot of unique stuff that’s happening there and I think there’s a broad runway and that has exposure to nice things. It has exposure to data centers. I like the auto space. We’ve got some good power capability there, right?

You think about GaN capability, you look at think about the other things that do high voltage. So I like those spaces as well. So I mean, that’s why I kind of like the niche as well, right? We’ve kind of got specialty experience in specialty semiconductors, which I think frankly is just going to continue to expand, right?

Joe Moore, Semi Natural Analyst, Morgan Stanley: Yes. So it’s still leveraging off of the core capabilities of the company into these spaces. Yes, I think so. That makes a lot of sense. So you mentioned the disruption at a key customer and you’re a few days in, so I don’t want to put you on the spot too much.

But how do you think about mending those fences and getting back to where you want to be? For better or

Phil Brace, CEO, Skyworks: worse, I mean, they are the best customer in the world to have. If you didn’t have a customer like that, everybody the conversation I’d be having with you is why don’t you have them? I mean, they demand excellence in everything. They demand excellence in performance. They demand excellence in cost.

They demand excellence in operational execution. And you may not like it, but that’s the game we play. And the rules are clear. You deliver the best product, you win. You have a jump ball, you split and you deliver a crappy product and you lose.

And so in the particular case, we delivered a jump ball. We didn’t lose, we delivered a jump ball. And as a jump ball, they’re going to split. So guess what? We need to do a better job.

I don’t like the rhetoric of us being screwed by them or anything else like that. We need to take it into our own pocket to deliver the best products period. And that’s what we got to do. And that’s and we’ve got some of the smartest people in the industry. I love it.

When I went to visit them, I’ve obviously visited them. They proactively so keep in mind, we do more products for them, more RF products than anybody else in the industry. We’ve been working with them since iPhone one or beyond. And we are pretty much every single RF product they have out there. So there is no confusion from them about how important the supplier for us.

However, the rules are also clear. We’ve got to deliver great products. So it’s our job to go back and do that. And that’s what we got to do.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Yes. Yes. It seems like you’re bringing the right mindset

Phil Brace, CEO, Skyworks: to

Joe Moore, Semi Natural Analyst, Morgan Stanley: resolve it. And I guess, again, I don’t want to put too much

Phil Brace, CEO, Skyworks: pressure on it.

Joe Moore, Semi Natural Analyst, Morgan Stanley: But the timeline of fixing it, you seem to have to wait for new platforms, obviously. There’s big basement transitions coming in, there’s all kinds of things coming.

Phil Brace, CEO, Skyworks: How long

Joe Moore, Semi Natural Analyst, Morgan Stanley: does it take to lead

Phil Brace, CEO, Skyworks: to this? Well, look, I mean, here’s the good news and the bad news. The challenge with this business, which is also the opportunity, the challenge is you got to win it every year. The opportunity is you get the opportunity to win every year. So guess what?

We lost the last game. We lost the game. We don’t like it. We’re picking up our ball. We’re going to compete against this time and we’re going to compete the cycle after that and we’re going to compete the cycle after that.

Yes. Period. That’s what we got to do. Now that doesn’t mean we can’t walk and chew gum at the same time. I don’t want anyone to walk out of here going, oh, we’re slowly going here.

We know where our bread is buttered. We got to deliver great products and then we got to continue to diversify the business. I mean, we just got to do it. We got to have conviction to go get it done.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Okay. Great. So leadership transition, can you talk about that, the immediate priorities that you’ve identified, the culture of the company, how are you thinking about the transitional elements here?

Phil Brace, CEO, Skyworks: Yes. I mean, look, obviously, I think with any sort of leadership transition, I think there’s an opportunity to reassess certain things. There’s an opportunity to bring some new culture into place. And one thing I’m trying to do, I’m trying to spend my time, first off, going to meet as many people as I can. I’ve been super impressed spending my time meeting the engineers and spending my time focused there going out and meeting the customers and then meeting some time with investors.

I’m doing a little bit of a listening tour. I would say some things I’ve been really impressed with so far, I think I mentioned it, IQ of the people, super smart. I love the edginess that comes out of the

Joe Moore, Semi Natural Analyst, Morgan Stanley: Investors, right?

Phil Brace, CEO, Skyworks: Yes, exactly. Investors too. I like that. And you know how the rule is played with the customer. I already met them and going to meet more.

And so I’ve been spending some time with that. I think I’m also trying to stay away from this, like we need to control what we can control, build great products. That’s what it comes down to, building great products. Forget about this fact that there’s all this coming, oh, did we get leveraged out, did this and that and the other. That is just freaking noise.

Of course, there may be some of that, but the way we solve this problem is building great products. And I think I’m focused there. And I think with the new leadership, there comes the opportunity to look at everything we’ve done and I’m going through to do some portfolio reviews and I’m doing what you’d expect. But I tell you, I’ve been working a ton of hours. This is day week three, day three.

And I have more energy at the end of the week than I do at the beginning of the week, because I’m just so there’s so many opportunities. There’s so much stuff to do. It’s just the field is open.

Joe Moore, Semi Natural Analyst, Morgan Stanley: The CEO that said that to me when she first took the job was Lisa Siew. We just got to build great products and I love that mindset because I feel like that’s really the thing. Everything else flows through from that. Everything flows through. Can you talk about the cultural values of the company and how you intend to make an imprint there?

Phil Brace, CEO, Skyworks: I think one of the things, and I guess I would I’ve got Chris and Roddy here that are probably a little bit better. They’re over there if you ask me to really they’re probably the better ones to ask culture change. Look, what I try and infuse is and I mean, this is what I talk to everybody about. When everybody talks about their career, right, they don’t necessarily talk about the time they got the biggest bonus, the time they got the biggest promotion. They don’t talk about that.

They talk about the time when they achieved something excellent, when they did something that no one expected them to do, when they did something freaking great. We have that opportunity right here, right now. Pick up your shorts, deliver the best product and turn this company into a way bigger company than it is now. And I’m just trying to instill that sense of urgency, fire, passion, it’s in our control, go get it done, right? And that’s kind of where I’m trying to fire everybody up.

I think there’s honestly, the company has been, I don’t want to say hibernating, but I think we haven’t been as aggressive as we could be. And I don’t think we’ve been as focused as we could been. I think we’ve been a little bit too complacent. So I’m just trying to get up there and get everybody fired up on achieving something great. And that’s what I’m trying to bring.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Yes, that sounds great. How do you think about maintaining that competitive edge? And I guess it’s pretty clear how you think about the RF products based on what you just said. But when you think about the broad markets, when you think about expanding the scope of the company’s activities, how hands on do you plan to be? Will you be involved in every kind of go, no go decision at the product level?

Just how are you anticipating reacting to all that?

Phil Brace, CEO, Skyworks: Yes. I think you’ve got a I mean, I think part of what you do is hire I’ve always been a big believer. You’re trying to hire smarter people than you and you want to unleash them to make the best decision you can. You’d be clear on the metrics and you hold them accountable for the results. Now having said that, I, at my core, am a detail oriented technology guy.

So I’ve already been digging in asking questions around, hey, how does this work? How does that work? How do we unleash the capabilities? Frankly, I’m asking questions, how do we use AI ourselves to make our own products better? If we’re not doing that, some of our competitors will.

So I’ve got some things like that already going underway now. I’m going to install an AISAR that’s going to have direct report to me. Tell me how we’re going to use AI tools in every element of the company to improve what we do, either cost, function, capability, productivity, whatever, period. So I think I’ll have an appropriate level of engagement, but I also need to hire smart people and empower them to be successful.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Very helpful. From an R and D perspective, where do you plan to put resources? And I guess, again, it’s early, but like any particular growth factors that are already underway that you’re excited about wanting to invest more in?

Phil Brace, CEO, Skyworks: Yes. I mean, so look, I think if you look, we have many, many areas of potential innovation. If you look just our core RF business, given the fact we also have manufacturing, there are things we do on the process side, on the device side, on the packaging side and integration side, which is, I think, a secret weapon that we haven’t really talked about. I mean, we have some of the most advanced packaging capability in the world where we integrate these tiny RF components in what are effect, I don’t want to say multi chip modules, but in these modules that I mean, we are leaps and bounds ahead of everyone else. So I see us continuing to invest in technology, process devices, packaging and then frankly how you integrate these things in total products that make the customers better.

So I think there’s lots of innovation. I think that some of the trade offs we need to decide is some of these advanced technologies come in 2029, right? You got to invest ahead versus do you have more investment in products now to go expand your capacity now? And I think that’s some of the trade offs we’ll need to go off and look at Macon.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Are there any things you don’t want to do? Like anything any direction you don’t want to pursue? Any big investments that you think, okay, that’s too far afield from what we’re good at?

Phil Brace, CEO, Skyworks: Yes. Early for me to say on that. I will say that, obviously, I’m going to go look at capital allocation and what makes sense for us, what’s close to our knitting. The path to success, the path to glory here is via growth, right? That’s it.

The path to glory is via growth. So of course, we’re going to look to see, hey, are we looking do we have investments in areas that like I’m not afraid to divest things. In fact, if you look back in my history, I’ve divested things, particularly things that, okay, if it requires an access of innovation and investment that is so far afield from where we’re doing now and we’re never going to be a meaningful competitor, then we may not be the best there may be a great business, but we may not be the best owner of that asset. And so we look to try if we can divest it to someone who can make better use of it and we can do it in accretive way, then I’m not opposed to looking at that. Right now, right, it’s early days.

I’m not opposed. Yes.

Joe Moore, Semi Natural Analyst, Morgan Stanley: But I

Phil Brace, CEO, Skyworks: haven’t nothing really jumps out at me yet. There’s something that may be. We’ll see.

Joe Moore, Semi Natural Analyst, Morgan Stanley: And any sense of the historic inorganic activity, it strikes me that the government’s been pretty good at it. And I think when you look at like the acquisition of the Silicon Labs connectivity business, for example, that’s been a home run. Just any thoughts around that as a precursor to what you may do going forward?

Phil Brace, CEO, Skyworks: Yes. I think we integrated that technology wise, Beacint. I think from a business perspective, we probably didn’t do as good a job of that. I mean, some of that just comes down to we some of it comes down to leadership and I’ll say walking and chewing gum at the same time, right? We’ve got to be able to focus on our number one customer and continue to grow that.

But I think we have a very good operational platform to look at M and A and I think that as time goes on, we’ll be focused on that.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Great. So I’ll pause there and see if we have any questions from the audience.

Phil Brace, CEO, Skyworks: Yes, you can probably yes. We’ve got to do the, I guess, webcast. Yes.

Unidentified speaker: Made some comments recently just in terms of obviously Chris guided OpEx for the year. But as we think about your large customer now launching their internal modems, is there anything you have from an OpEx rationalization standpoint or more targeted towards that platform via versus legacy platforms?

Phil Brace, CEO, Skyworks: Yes. So, I think so, yes, in the past, if we look back, we had to basically have dual investment streams to accommodate their internal platform versus external platform. And so we did have dual investment streams on the same sockets, if you will, right? We had to do that. That seems to be behind us now with respect to launching of their internal products.

And so I do expect to have some capacity become available. And I think that comes back to the question I said before, do you choose to reallocate that capacity in incremental opportunities that we have? Because we don’t believe that we believe we’ve got more sockets that we can target at that particular customer. And so I think we’ve got and we have the technology and capability to do it. However, do we balance out on maybe investing more in advanced technology that could help us differentiate ourselves in the future.

So I do think we do have some capacity, R and D capacity that’s going to become available, that is starting to become available that should we should allow to reallocate to drive some future growth. So I think the answer to that question is yes.

Unidentified speaker: Okay. That was my main question, but I have another one, a follow-up. You mentioned on broad markets, some opportunities like aluminitrite, I think you mentioned something like that in power. Can you elaborate what else are you thinking there? Because that’s a pretty competitive space.

There’s many people trying to get into aluminitrite power. What can you elaborate on broad markets?

Phil Brace, CEO, Skyworks: Well, look, I think we’ve got three major areas. We’ve got the IoT edge, right, which includes a lot of the Wi Fi products, the device products, so a lot of things like that. I think we’ve got a number of access of innovation there, whether it’s Wi Fi seven, Wi Fi eight, near field communications. I think we’ve got a lot of innovations that will happen in that space that will basically scale with the number of devices that are connected. I think we’ve got the auto space.

And when I look at autos, there’s probably multiple areas of innovation that we’ve got there. One is on the power side, power isolation, all that stuff, high voltage. The other side is on the vehicle to vehicle connectivity, right? And talk about all the wireless things that are happening inside the car, outside the car. I just think in general, there’s tremendous upside from that side.

And then you’ve got kind of the infrastructure space, which includes timing products and industrial products, things like that. So I actually think there’s a lot of different spaces and areas we can grow. And frankly, there’s a lot of opportunities that we have both organically and inorganically to kind of add to our portfolio there that will increase our competitiveness and increase our TAM, right? So, answer your question? Okay.

Okay. Lots of questions.

Joe Moore, Semi Natural Analyst, Morgan Stanley: All right. So,

Unidentified speaker: I appreciate the focus on best technology, but you started by saying you’re in a bad neighborhood whether you like it or not. And I’m just wondering how you actually other than the leadership culture changes you’re trying to make, how do you fight your way out of this neighborhood? I mean, this is a really I’ve followed this company for a long time and some of the problems you’re facing today are more acute than they were a year ago and they were more acute a year ago than they were the year before. You have the same number of competitors that will have traditionally been in your world. You have new competitors that will service the China market where and some of the emerging markets where a lot of the growth will come from.

So, my perspective has been in the last couple of years, this has turned into a circular firing squad, where you guys just have to actually fight it out and even success means staying still. So it’s not a criticism, it’s just a question like how do you actually solve that problem without some significantly different strategy than just building more better products? And maybe that view is wrong, but if it is, I want to hear it.

Phil Brace, CEO, Skyworks: No, look, I guess, the comment on building different products is and part of it is a culture thing I’m trying to do still, right? At the end, we’ve got to build great products, period, no matter what, right? That is the path and that’s how we would just stop I’m not trying to hand wring and say, oh, they screwed us and this kind of that. We’ve got to build great products. I think what you’re talking about is more around the industry structure, how many players in the industry fighting for fewer sockets and things like that.

And I do think you can argue that consolidation in this space, whether you’re a buyer or seller, is an inevitable outcome. I mean semiconductors in general needs to go down that path. What I’m trying to do is solidify our base our castles under attack, so defend the castle and then use the financial resources that the castle provides us in order to have to change a different narrative. I mean, you look, we still got I mean, we’ve got more than $1,000,000,000 broad markets business. No one pays any attention to it.

Matter of fact, every single conversation I have is around what’s happening on iPhone 18 down selection. Okay. Well, to some extent, it’s a self inflicted wound because we still answer those questions and it’s such a dominant part of it. So we’ve got to continue to build and talk about and show progress in the other areas. And if you actually look, I think that last quarter was the first quarter in years we’ve shown year over year growth in the broad market business.

So I think some of the digestion period is behind us. The gross margins are higher. I think we’ve got some very attractive businesses there. And so I think we need to continue to do that. You can’t necessarily it goes back to we do develop RF components and we do have a very large customer.

You can solve that problem by getting smaller with the largest customer, which is ironically what we’ve been doing, but that’s probably not my path to glory, right? So we got to figure out how we defend that, grow a little bit and then spend a lot more time defending ourselves outside. And I think some of the management change, honestly, has to do with probably, and I’ll ask the team there, a little bit of you got to have conviction, right? You got to have some conviction. You got to have some fire in your belly.

You got to be willing to make some bold decisions go forward. And I think that’s part of some of that was there, right? You can’t keep doing the same thing you’ve been doing for the last four years and expect anything to be any different. So to answer your question, I know there’s some week three, day three, right? So I would say early days, but let me put it this way.

I wasn’t bought here to keep playing the same movie and have the same results.

Unidentified speaker: Hello. I have one question. Actually, Skyworks used to wheel them for the like RF and wireless companies. And through acquisition a couple of years ago, you got like analog and power to enter the automotive and industrial space. But for the automotive and the industry, like a lot of big player here is like playing like a total solution card.

So basically, I’m seeing like it’s kind of become more and more popular for customer to get the tools solutions because the design cycle is getting shorter and shorter. But compared to Skyworks portfolio, you kind of very, I would say, fragmented. So only have a few of the products there. So I want to know how do you want to build a synergy in the automotive industry space with your existing product portfolio? You want to like get more products from other companies through M and A or what?

Or you want like a single different way to pivot to other applications? Thanks.

Phil Brace, CEO, Skyworks: So I think your question is, look, we compete in the auto space in particular. We compete with a lot of bigger companies that have broader portfolios and there’s some argument, do they bundle the products or do all these things? I think we have more from what I can see, three weeks, three days in, I don’t think we’ve yet seen that a problem. And that’s probably because we’re not big enough yet for that to be a problem, right? We can probably grow our auto business.

I’m just looking at 200 to 400. I mean, we can easily double it and not run into that problem yet, right? Eventually, we probably will because there’s a scale there, but we’re not yet of a scale where we’re running into that, right? And goes back to if we build great products, then I think we’ve got an opportunity. So I’m not at the point where I’m worried about that.

Is there opportunity to acquire capability in the space? Yes. Are we going to be careful about it? Yes. But I mean, for me, it’s this is a huge TAM that we haven’t even approached.

And I’m pretty I mean, I like our chances, right? It’s early game. I mean, I’m not saying we’re done yet, but I like our chances. That answer your question? Okay.

Joe Moore, Semi Natural Analyst, Morgan Stanley: We’ll revisit the bad neighborhood thing, because I feel like for a decade, Skyworks did really well and grew and content per phone grew every year. And yes, the concentration weighed on the multiple. And then you had the last three years has been really painful for sure. But it seems like the zero sum part to me feels a little bit negative because it does seem like content is still growing.

Phil Brace, CEO, Skyworks: I mean, I guess the bad news. I’m glad you brought that up. And look, it’s the neighborhood we’re in. It’s competitive, it’s challenging. I mean, okay, I mean, it’s been challenging because we haven’t been performing that well.

I mean, honestly, if we had been rising our content, if we’ve been growing our content and we’re $13 to $14 to $15 per mobile device and growing our product, I mean, that could be totally different, right? It’s a bad neighborhood because we haven’t been performing that well in it. And I think, yes, I mean, it goes back to we’re trading at a discounted multiple compared to some of our analog RF peers because we do have a customer concentration challenge. But that customer concentration challenge, that’s a proxy for volatility, right? And they don’t if we had continued to grow, well, yes, then we wouldn’t be in that we’d be having a different discussion, right?

Joe Moore, Semi Natural Analyst, Morgan Stanley: Well, it is hard to focus on the broad market business because nobody cares about it. I mean, we do care, but the variance from quarter to quarter

Unidentified speaker: is driven

Joe Moore, Semi Natural Analyst, Morgan Stanley: by something else. So our questions are all going to be about that. No,

Phil Brace, CEO, Skyworks: I understand. I understand.

Joe Moore, Semi Natural Analyst, Morgan Stanley: I don’t want you to think that we don’t care.

Phil Brace, CEO, Skyworks: I just kind of made a joke about that.

Joe Moore, Semi Natural Analyst, Morgan Stanley: Great. Any other questions?

Phil Brace, CEO, Skyworks: Okay.

Joe Moore, Semi Natural Analyst, Morgan Stanley: We wrapped up there, Phil. Thank you very much.

Phil Brace, CEO, Skyworks: All right, I see. Thank you.

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