Skyworks Solutions, Inc. (SWKS) | The Buildout — AI Infrastructure
The Verdict
Skyworks Solutions designs and makes the analog and radio-frequency content that sits around a phone's antenna, plus the timing and power-isolation parts that go into data centers, cars and industrial equipment. In the AI buildout it is not a compute supplier. It is an enabler: the AI wave reaches it through networking platforms and power delivery inside data centers, through WiFi upgrades at the edge, and through whatever extra RF complexity AI-enabled handsets eventually require. The company is a US RF house trying to merge with another one while widening beyond a single large handset customer.
| Market Cap | — |
| Revenue (TTM) | $4.0B |
| Revenue Growth | +0.1% |
| EBITDA Margin (TTM) | 19.4% |
| Net Cash | $118M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Broad Markets was 42% of FQ2 2026 revenue at about $400 million a quarter, grew 10% year over year, and posted a ninth consecutive quarter of growth.
- The three Broad Markets growth engines — WiFi, data center and automotive — were nearly two-thirds of Broad Markets revenue and grew 30% year over year.
- A multigenerational design win with an unnamed premium-tier Android OEM is expected to generate over $1 billion in revenue through 2030, rising year over year, described as incremental business at premium gross margins.
- The data center segment is expected to grow nearly 50% in FY2026, with products aimed at 800-gig and 1.6-terabit platforms and the industry move to 400-volt and 800-volt HVDC power architectures.
- The pending Qorvo combination targets $500 million or more in synergies and a 50%–55% post-close gross margin, and management says it is increasingly hopeful of closing in late 2026 against a formal early-2027 expectation.
What We’re Watching
- The FQ2 2026 10-Q attributes the year-over-year revenue decline to "a decrease in market share at a significant customer," partly offset by WiFi demand — a more cautionary framing than the call's mobile beat.
- The largest customer was about 60% of FQ2 2026 revenue, down from about 67% in FQ1; the filing's share-loss language means that decline is not purely diversification.
- The Qorvo close depends on China SAMR's Phase 2 review and the remaining antitrust and shareholder approvals before an actual closing.
- Input costs are rising — management named gold prices and expedite fees — and FQ3 gross margin was guided to 44.5%–45.5%, flat sequentially against a historical average decline of about 70 basis points from Q2 to Q3.
The thesis is shifting rather than simply strengthening. Broad Markets is compounding, the Android win is the first quantified multiyear diversification disclosure in the source set, and the Qorvo combination is moving through regulatory review, financing steps and integration planning. Against that, the core mobile business is not growing: revenue was down 1.0% year over year in FQ2 2026 and down 3.1% in FQ3, the FQ2 10-Q attributes the decline to share loss at a significant customer, and management guides blended content at that customer to be roughly flat next year. The open question is whether the largest customer's share stabilizes before Broad Markets, Android and data center are large enough to carry the total.
Earnings Beat
Skyworks reported FQ3 FY2026 revenue of $934.8 million, down 3.1% from $965.0 million a year earlier and slightly below the prior quarter's $943.7 million. Gross margin was 40.1% on a GAAP basis, down from 41.6% a year ago and 40.8% in the prior quarter. EBITDA was $165.2 million, or 17.7% of revenue, up from $154.5 million in FQ2 but down from $226.5 million a year earlier. Free cash flow was negative $254.7 million, following negative $32.0 million in FQ2.
| Metric | Q3 FY2026 | Q2 FY2026 | Q3 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $935M | $944M | $965M | −3.1% |
| Gross margin | 40.1% | 40.8% | 41.6% | -150bps |
| EBITDA | $165M | $154M | $226M | −27.1% |
| EPS | $0.22 | $0.24 | $0.70 | −67.8% |
| Non-GAAP free cash flow | -$254.7M | -$32.0M | $246.0M | Turned negative |
We secured a significant multigenerational design win with a leading Android OEM expected to generate over $1 billion in revenue through 2030.— Philip Brace, CEO, 2026-05-05
Management tone: On the FQ2 FY2026 call, management's tone was more bullish than the prior quarter. FQ1 had carried cautious language on the largest customer's content and an early-2027 deal close; FQ2 opened with the Android win, a quantified data center growth figure, nine quarters of Broad Markets growth and the possibility of a late-2026 close. Management answered sizing questions directly — China under $200 million annually and under $20 million in handsets, data center under $100 million a year, automotive roughly $250 million — and was direct about input-cost pressure and selective price increases. It would not name the Android customer or go further on transaction details, and it handled specific largest-customer model questions by returning to a general positive stance. No FQ3 call commentary is in the source set.
Management Guidance
For FQ3 FY2026, issued with the FQ2 call on May 5, 2026, management guided revenue of $900 million to $950 million, gross margin of 44.5% to 45.5%, operating expenses of $235 million to $245 million, and diluted EPS of $1.03 at the midpoint. Mobile was guided to decline approximately low single digits sequentially; Broad Markets was guided up modestly to 43% of sales and up high single digits year over year. The guide assumed a 10% tax rate, other expense of about $4 million and 151 million diluted shares, and a midpoint revenue of $925 million implying roughly a 2% sequential decline. Alongside it, management guided data center to grow nearly 50% in FY2026 and blended content at the largest customer to be roughly flat next year, with potential upside from that customer's migration to an internal modem.
Trajectory
Revenue has stepped down for three straight quarters: $1,100 million in FQ4 2025, then $1,035 million, $944 million and $935 million through FQ3 2026. GAAP gross margin has held in a narrow band between roughly 40% and 41%, but EBITDA margin compressed from 22.5% in FQ1 2026 to 16.4% in FQ2 and 17.7% in FQ3. Free cash flow swung negative in each of the last two quarters, and trailing-twelve-month free cash flow covered 68% of net income. Mix is the driver: Broad Markets grew for a ninth consecutive quarter in FQ2 2026 to roughly $400 million a quarter while mobile declined, and the FQ2 10-Q attributes the year-over-year revenue decline to share loss at a significant customer, partially offset by Wi-Fi demand.
The Model
The model projects FY+1 revenue of $4,120 million and EBITDA of $948 million, a 23.0% margin, then FY+2 revenue of $4,330 million and EBITDA of $1,018 million, a 23.5% margin. Trailing-twelve-month EBITDA margin is 19.4%, so the projections assume margins improve from current levels. Near-term, the anchors in the source material are Broad Markets growth off a roughly $400 million quarterly base, a data center segment guided to grow nearly 50% in FY2026, and the start of an Android design-win ramp expected to rise year over year through 2030. FY+2 depends on whether those engines keep compounding and on the Qorvo combination, which targets $500 million or more in synergies and a 50%–55% post-close gross margin; the source material does not say whether the projections assume that deal closes.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $4.1B | $4.1B | $4.3B |
| YoY Growth | — | +0.8% | +5.1% |
| EBITDA | $963M | $948M | $1.0B |
| EBITDA Margin | 23.6% | 23.0% | 23.5% |
Projections are the median of 5 independent model runs. The model’s revenue sits 5.6% above analyst consensus.
For FQ3 FY2026, issued with the FQ2 call on May 5, 2026, management guided revenue of $900 million to $950 million, gross margin of 44.5% to 45.5%, operating expenses of $235 million to $245 million, and diluted EPS of $1.03 at the midpoint. Mobile was guided to decline approximately low single digits sequentially; Broad Markets was guided up modestly to 43% of sales and up high single digits year over year. The guide assumed a 10% tax rate, other expense of about $4 million and 151 million diluted shares, and a midpoint revenue of $925 million implying roughly a 2% sequential decline. Alongside it, management guided data center to grow nearly 50% in FY2026 and blended content at the largest customer to be roughly flat next year, with potential upside from that customer's migration to an internal modem.
What Could Go Right — and Wrong
- Broad Markets keeps compounding: WiFi, data center and automotive were nearly two-thirds of Broad Markets revenue and grew 30% year over year, with WiFi 7 demand corroborated by Cisco's highest-ever wireless orders, up more than 40% year over year.
- The Android design win ramps as described — over $1 billion through 2030, rising year over year, at premium gross margins.
- Data center grows nearly 50% in FY2026 from a sub-$100 million base and converts design wins at hyperscalers, ODMs and infrastructure OEMs.
- Blended mobile content at the largest customer holds roughly flat next year, with upside from that customer's migration to an internal modem.
- The Qorvo combination closes and the combined company reaches $500 million or more in synergies and a 50%–55% gross margin at roughly 1x net leverage.
- Share loss at the largest customer continues; the FQ2 2026 10-Q already attributes the year-over-year revenue decline to it.
- Input costs outrun price increases and gross margin breaks below the guided 44.5%–45.5% band.
- The Qorvo deal slips beyond the formal early-2027 expectation or fails to close; it still needs China SAMR Phase 2 clearance and the remaining antitrust and shareholder approvals.
- Memory-driven supply dislocations in handsets disrupt premium handset builds.
- Free cash flow stays negative while capital spending runs at roughly double last year's pace and quarterly dividends run about $107 million.
Looking Ahead
Over the next year the question is whether diversification shows up in reported revenue while the Qorvo deal clears its regulatory path. China SAMR's Phase 2 review, the remaining antitrust and shareholder approvals, and the debt financing now moving through exchange offers and new agreements all sit between here and a close. On the organic side, the Android design win begins a ramp toward more than $1 billion through 2030, data center timing and power is guided to grow nearly 50% in FY2026, automotive programs extend further into FY2027, and management expects blended content at the largest customer to be roughly flat next year with possible upside from that customer's internal modem.
- Late 2026 / early 2027Qorvo combination close — Tests whether the deal clears SAMR Phase 2 and remaining approvals.
- FY2026Data center growth — Guided to grow nearly 50% from a sub-$100M base.
- Next fiscal yearLargest-customer content — Blended content guided roughly flat; internal modem upside.
- Next upgrade cycleWiFi 8 and 6G FR3 — Early WiFi 8 collaboration; BAW filters for early 6G FR3.
- FY2027Automotive footprint — Power and connectivity expand further into FY2027.
- Through 2030Android win ramp — Over $1B across generations, rising year over year.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $4.2B | $4.1B | $4.0B | -2.2% |
| Gross Margin | 41.1% | 41.2% | 40.7% | +8bps |
| EBITDA | $1.1B | $963M | $780M | -11.5% |
| EBITDA Margin | 26.1% | 23.6% | 19.4% | 249bps |
| Net Income | $596M | $477M | $290M | -19.9% |
| Free Cash Flow | $1.6B | $1.1B | $196M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)40.7%
- EBITDA Margin (TTM)19.4%
- Net Margin (TTM)7.2%
- ROIC4.5%
- FCF Conversion25.2%
- SBC / Revenue5.8%
The Company
Skyworks designs and manufactures analog and mixed-signal semiconductors. The product set in the FY2025 10-K includes amplifiers, antenna tuners, filters (SAW, TC-SAW and BAW), front-end modules that co-package two or more functions in the RF signal path, digital power isolators used in industrial control, solar inverters and hybrid/electric drivetrains, and timing devices — clock generators, oscillators, jitter attenuators and buffers — for optical networking, data centers, wireless base stations, industrial and automotive use. The filings list no formal reportable segments; management speaks to two operating cuts. Mobile was 58% of FQ2 2026 revenue and Broad Markets was 42%.
The FY2025 10-K lists nine primary sites totaling approximately 2.27 million square feet, including leased filter manufacturing in Singapore at 429,500 square feet and owned filter manufacturing in Osaka at 383,600 square feet, two Mexicali sites for manufacturing and offices at 380,000 and 378,000 square feet, and design centers in Irvine, Woburn, Newbury Park and Austin. Skyworks buys wafers and materials, designs and manufactures its own content, and sells mostly through distributors — 86% of FQ2 2026 revenue — with the rest direct. The 10-K discloses dependence on a limited number of sole-source suppliers for raw materials and components.
Business Segments
Competitive Landscape
The FY2025 10-K names the competitor set: Analog Devices, Broadcom, Cirrus Logic, Murata Manufacturing, NXP Semiconductors, Qorvo, Qualcomm and Texas Instruments. Qorvo appears on that list and is also the pending merger partner, so a closed deal would remove one direct RF competitor. In the data center, Skyworks is a small entrant — its directly labeled data center revenue is under $100 million a year — up against more established timing specialists; the intel file flags SiTime as executing aggressively, with its communications, enterprise and data center segment up 158% year over year. The 10-Q notes that erosion of average selling prices of established products is typical of the semiconductor industry.
- QorvoNamed in the 10-K competitor list and also the pending merger partner; the combination targets $500 million or more in synergies.
- SiTimeFlagged in the intel file as a precision-timing competitor executing aggressively; its communications, enterprise and data center segment grew 158% year over year.
- QualcommNamed in filings; not discussed.
- BroadcomNamed in filings; not discussed.
- Analog DevicesNamed in filings; not discussed.
Supply Chain
Skyworks sits between wafer foundries and materials suppliers on one side and handset, data center, automotive and industrial customers on the other. It designs and makes RF, timing and power content and sells mostly through distributors. No neighbor call in the source set names Skyworks directly.