Although Skyworks Solutions (NASDAQ:SWKS) has done a good job broadening its customer base beyond Apple (NASDAQ:AAPL), the fact is that Apple continues to be the wireless chip supplier's largest customer. That means sales of Apple products, and Skyworks' share within Apple's key products, both affect Skyworks' financial performance.
Those who follow the company, then, should keep close tabs on what Skyworks says about its relationship with Apple.
Here are three items pertaining to that relationship from the company's most recent earnings call.
The iPhone ramp-up
When analyst Blayne Curtis asked Skyworks CEO Liam K. Griffin about a possible delay in the ramp-up in chip shipments to Apple in support of the next iPhone because of the rumored delays in the new iPhone models, Griffin seemingly ducked the question. He did, though, offer some insight into the ramp-up.
"We are seeing a predictable cycle with our largest customer, and the areas that we can control are around content reach and our ability to drive technology," Griffin said.
"Content reach" is a fancy way of referring to how much revenue per iPhone Skyworks can grab, and "ability to drive technology" seems to be Griffin's way of indicating that the better Skyworks' technology is, the more potential share per iPhone it can grab.
"We feel really good about that equation," Griffin added.
As far as the ramp-up itself, Griffin didn't offer specifics on timing, but he did say the management team feels comfortable with company's "backlog visibility and forward-looking momentum" with respect to Apple.
What Griffin appears to be saying here is that irrespective of the timing of the product ramp-up -- which Griffin might not want to give away to protect Apple's confidential information -- Skyworks has good visibility into the shape of the ramp-up once it begins.
"We feel good about the [product] cycle," Griffin elaborated. "And we have a very broad mix across legacy, new models, and also a portfolio of non-mobile products within that account."
In other words, Skyworks looks set to benefit nicely from the next iPhone.
Does Skyworks care about the modem vendor?
It's well known that Apple began dual-sourcing its cellular modems from both Intel (NASDAQ:INTC) and Qualcomm (NASDAQ:QCOM), beginning with the iPhone 7-series and probably continuing for the foreseeable future.
However, as Barron's reports, analyst Timothy Arcuri said in a recent investor note that Skyworks had more content share in the Qualcomm-based phones, while rival Qorvo (NASDAQ:QRVO) had more content in the Intel-based iPhone models.
Analyst Edward Snyder, on Skyworks' most recent earnings call, asked management about Skyworks' positioning in the various iPhone models this year.
"We expect to have a solid position with all of the basebands that our largest customers use; we feel very good about that," Griffin began. "We refresh our product line in ways that make sense; we have a technology reach that's expanded."
Griffin then went on to explain that Skyworks has "demonstrated [its] ability to work with multiple baseband providers."
"Nothing's different with our largest customer; we will demonstrate the same level of performance," he said.
How about content share gains?
As smartphones have gained increasingly robust cellular subsystems, many wireless-chip vendors have enjoyed generation-over-generation dollar content increases, sometimes substantially so.
On the call, analyst Chris Caso asked management about the trend in dollar content per phone for the coming iPhone models, as well as some information about the impact of Apple's product mix on Skyworks' business.
To that, Griffin explained that the company "can't get into too much detail here with [its] largest customer," but he added that the company is "confident in what [it has] modeled financially."
"We understand what we've won with respect to content, and we completely understand where the mix is and having all that flush through with our guidance," Griffin explained.
Ashraf Eassa owns shares of Intel 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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