Skyworks’ stock could see its worst day on record, with analysts noting that Broadcom seems to have gotten in on the action for a lucrative iPhone socket
Due to faulty FactSet data, a previous version of this report included an incorrect historical comparison of the stock’s move.
Skyworks Solutions Inc. shares could see their worst performance on record Thursday as investors grapple with changes in the connectivity company’s relationship with Apple Inc.
Skyworks (SWKS) makes radio-frequency components, and its management said on the earnings call that the company has been working with its largest customer for 18 years. That customer is widely seen to be Apple (AAPL), though Skyworks didn’t mention the name on its call. But Skyworks noted that for the coming smartphone cycle, the company expects a lower “content position” in the new phones.
That’s expected to weigh on revenue beginning in the September quarter, with impacts throughout the following fiscal year as well. Skyworks Chief Financial Officer Kris Sennesael said the company “did not get the result that we targeted” with the RF components it developed for this new smartphone cycle but that the company was already working on solutions for the next one.
The loss of Apple content is a “nightmare realized,” according to Susquehanna analyst Christopher Rolland. And Needham’s Nick Doyle estimated that Apple on the whole accounts for 65% to 70% of Skyworks’ revenue. Companies are required to disclose in their 10-Ks if any customers account for more than 10% of annual revenue, and Apple was the only one that Skyworks named in its latest filing.
See also: Here’s what the Apple bears are getting wrong about the stock
Skyworks expects its content position to be down 20% to 25% in the coming phone cycle.
Shares of Skyworks are down 23% in midday trading Thursday and pacing S&P 500 SPX laggards. If those losses carried through to the close, Skyworks would see its sharpest one-day decline on record, dating back to the merger of Alpha Industries and Conexant Systems in 2002, according to Dow Jones Market Data.
Benchmark Research analyst Cody Acree thinks Broadcom Inc. (AVGO) has gotten in on the action for the socket in question as Apple moved to “dual-source” the component.
“This design, which has historically been sole sourced by Skyworks, having first won the socket in the iPhone 12 platform, looks to have grown into a highly complex solution, earning the company an estimated [average selling price] of about $3-$4,” Acree wrote. That’s a “relatively attractive” average selling price, he added, which seems to be why there’s more competition in this space.
“With Apple seeing little clear performance difference between the competitors, the [original equipment manufacturer] took the somewhat unusual step and decided to dual source the part,” he wrote, while keeping a hold rating on Skyworks’ stock.
Skyworks is now in “wait-and-see” mode until the iPhone 18 comes on the horizon, according to Stifel analyst Ruben Roy. Right now, Apple is on the iPhone 16, with the iPhone 17 due out this fall, so that implies a long period of uncertainty for Skyworks.
The company stands to gain content for the iPhone 18 family depending on progress with Apple’s internal modem, Roy wrote. “However, that is highly dependent on execution and the increasing competition from existing players on a broader array of iPhone components continues to pose a risk longer-term, in our view,” he added.
“In the meantime, revenue and profitability prospects are now significantly lower relative to our previous assumptions” through fiscal 2026, Roy wrote. He cut his rating on Skyworks’ stock to hold from buy.