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5 Things You Didn't Know About Skyworks Solutions, Inc.

By Leo Sun - Jul 18, 2017 at 7:03AM

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Let’s examine five lesser-known facts about the Apple supplier.

Skyworks Solutions (SWKS 3.95%) supplies power amplifiers, front-end modules, and RF chips to a wide range of industries, but it's best-known as an Apple (AAPL 2.62%) supplier. That's because orders from the iPhone maker accounted for 40% of its revenues last year.

Skyworks is also the chipmaker that nearly bought PMC-Sierra for $2 billion in late 2015, but was eventually outbid by Microsemi (MSCC). It's frequently mentioned as a long-term play on the Internet of Things (IoT) market, since its chips provide connectivity to all sorts of devices.

A graphical representation of the Internet of Things.

Source: Getty.

But instead of focusing on those well-known facts about Skyworks, let's check out five lesser-known facts that might change your overall perception of the chipmaker.

1. It was formed via a merger

15 years ago, chipmaker Alpha Industries merged with Conexant Systems. Both companies produced RF chips, power amplifiers, and other communication chips for a wide range of industries. The new company was named Skyworks, which promoted itself as a "pure play" wireless integrated circuit company.

Alpha CEO David Aldrich became Skyworks' CEO and led the company until last year, when he was succeeded by Liam Griffin, a former executive at Dover and AT&T. Griffin also serves on the board of Vicor, which designs and manufactures modular power components and complete power systems.

2. It recently joined the Semiconductor Industry Association

Earlier this year, Skyworks joined the Semiconductor Industry Association (SIA), which represents the U.S. semiconductor industry in talks with the government and other industry stakeholders. Skyworks is now one of the 18 charter members of the group -- which also includes industry heavyweights like Intel, Qualcomm, and Texas Instruments.

SIA President and CEO John Neuffer noted that the addition of Skyworks demonstrates the "growing momentum for collaboration among key semiconductor leaders to shape public policies that impact our industry."

Neuffer noted that the goals of the association include "making the U.S tax system globally competitive, investing in university-based basic research, expanding access to global markets, and strengthening America's tech workforce."

3. It has a Sustainability Council

Skyworks has its own "Sustainability Council", a team that ensures that the company improves its labor, environment, health, safety, ethics, and management standards. Last year, the council reported that Skyworks saved 32 million kWh in electricity and 38 million gallons of water with new energy-efficient standards.

It also averted 10,000 tons of CO2 equivalent emissions, 404,000 pounds of hazardous waste, and 494,000 pounds of municipal waste to landfills with its policies. 100% of its supply chain was verified as "conflict-free" -- indicating that its materials weren't purchased from war-torn regions.

Over 98% of employees' workweeks remained below the 60-hour limit set by the company, and more than 99% of its employees were trained on Skyworks' business conduct and ethics requirements.

4. It might buy Microsemi

Over the past few months, several reports claimed that Skyworks could buy Microsemi, which topped Skyworks' own bid for PMC-Sierra. Last November, RBC Capital analyst Mitch Steves suggested that Skyworks could buy Microsemi for $70 per share -- a near-40% premium to its current price.

However, Steves notes that Skyworks may need to outbid other potential buyers, including Texas Instruments and Maxim Integrated Products. But if it successfully acquires Microsemi, Skyworks would gain clout against Apple (since Microsemi is another Apple supplier), while scaling up its chipmaking operations.

5. It starred in a music video

A semiconductor plant is probably a weird setting for a music video, but that didn't stop indie rock group The Postal Service from filming the video for "Such Great Heights" at Skyworks' fabrication plant back in 2003.

Three years later, Apple and Intel released an ad promoting their new factories. Apple also filmed the video at the same Skyworks fab -- which bore striking similarities to The Postal Service's music video.

The key takeaways

These five facts might not change your overall investing thesis on Skyworks, but they offer different insights into a company which is often lumped together with other Apple suppliers.

I've previously stated that Skyworks' exposure to Apple, its content share gains in other phones, and IoT growth potential make it a great long-term buy. I stand by that assessment, and believe that Skyworks should keep rising -- even after rallying more than 50% over the past 12 months.


Leo Sun owns shares of AT&T and Qualcomm. The Motley Fool owns shares of and recommends Apple and Skyworks Solutions. The Motley Fool owns shares of Qualcomm and has the following options: short November 2017 $95 calls on Skyworks Solutions and short November 2017 $92 puts on Skyworks Solutions. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Skyworks Solutions, Inc. Stock Quote
Skyworks Solutions, Inc.
$111.01 (3.95%) $4.22
Apple Inc. Stock Quote
Apple Inc.
$169.24 (2.62%) $4.32
Microsemi Corporation Stock Quote
Microsemi Corporation

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