Skyworks Solutions SWOT and PESTLE Analysis

Strength

1. Large product portfolio with multiple applications: Skyworks offer a large range of products with latest technologies like Innovative Sky5TM Platform. It is Skyworks’ unifying platform that is providing power to revolutionary 5G applications, it provides good performance and transforming the way people live, work and educate. This product has high performance transmit/receive front-end solutions for new spectrums. In august 2018 Skyworks acquired smart interface innovator Avnera Corporation which has disrupted the market with its technologies like ASoC solutions for audio, video, AI, speech and sensor. Through this acquisition, Skyworks has also grabbed prominent position in wireless connectivity. Skyworks is estimating to have 75 billion devices by 2025 throughout the world. Its high performance analog semiconductor solutions support applications of different industry like aerospace, automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet and wearable. Skyworks also deliver vital medical equipment such as blood sugar monitors, hearing aids, pacemakers, heart monitors, hearing ads and MRI scanners. Skyworks also provide smart house connecting devices. It also comprises devices that consume low power and emits high voltage.

2. Diverse geographic supply chain: Skyworks has been recently expanding its abilities within three major areas, customer base, addressed markets and products. The company is combining its expertise regarding core analogs with mixed signal technologies to develop a better set of solutions that will cater to the needs of an increasingly diverse end markets and customers. It is rapidly moving beyond mobile phones, thanks to 5G technology and the almost constant emergence of newer applications, to enter other high-performance analog markets like home and factory automation, medical, smart energy, automotive and wireless networking. In the mobile phone segment, it is already supporting all high end mobile manufacturers as well as key baseband vendors. With the expansion into new markets, Skyworks will be able to increase its scale, global distribution network and intellectual property. The scope of the company currently stands at over 3,200 customers and over 2,500 analog components.

3. Consistently Strong Financial Performance: Skyworks’ investment in fiscal 2018 was much higher compared to fiscal 2017. The company not only upgraded its equipment but also purchased significant stake as marketable securities. A number of acquisitions were made in 2018 to strengthen the capabilities of the Company and promote growth. Cash flow also increased during fiscal 2018 as compared to 2017. There was limited liquidity due to the purchase of stocks. With a market capitalization of US$14.8b, Skyworks Solutions is a large-cap stock, which is considered by most investors as a safe bet. Overall annual revenues of the company have also been consistently rising within the last decade. The Non-GAAP earnings per share of the company are seen to have gone from $0.69 in FY2009 to $3.24 in FY2014. Since then growth rates have accelerated greatly, allowing the company to reach $7.22 in FY 2018. This translates to a compound growth of as much as 19% within the last nine years.

4. Transforming Connectivity through 5G: The demand for high speed data at low costs will rapidly surge as people are increasingly becoming dependent upon cloud usage and connected devices. The emergence of 5G has had a major role to play as it has the ability to facilitate communication between larger machines than ever before. Experts within the industry speculate that 5G will be connecting over 75 billion devices by 2025. Skyworks Solutions has a very good opportunity in place as it can leverage its 5G technology knowhow to offer customers with a wider range of options than its competitors. Skyworks has been a pioneer in developing 5G, underscored by state-of-the-art performance and scale across a wide portfolio of offerings like the millimetre wave, BAW filters, TC-SAW, ultra-high band, expanded family of MIMO and diversity receive modules. The early engagement of Skyworks with 5G has put it in a unique position that allows it to provide customers with integrated RF front-end systems that will take 5G from the device level to an infrastructure level.

Weakness

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Opportunity

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Threat

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Political

1. Exposure from business in China: Skyworks is particularly exposed to risks of doing business in China and still expecting to continue to expand their business and operations in China. Their success in the Chinese markets may be adversely affected by China’s continuously evolving laws and regulations, including those relating to taxation, import and export tariffs, and currency controls, anti-corruption, environmental regulations and intellectual property rights and enforcement of those rights. Enforcement of existing laws or agreements may be inconsistent. In addition, changes in the political environment, governmental policies or United States-China relations could result in revisions to laws or regulations or their interpretation and enforcement, exposure of the proprietary intellectual property, increased taxation, restrictions on imports, import duties or currency revaluations, which could have an adverse effect on the business plans and operating results of Skyworks. Further, the evolving labor market and increasing labor unrest in China may have a negative impact on the customers, which would result in a negative impact on their business and results of operations.

2. Reliable military and space solutions: Skyworks Solutions, Inc. has innovated a high-performance analogue semiconductor which connects people, places and things. It has unveiled its latest high reliability solutions for demanding military and space applications with stringent operating requirements. Sealed and impedance-matched amplifiers which Skyworks made to function in harsh environments and can be leveraged in a multitude of communication platforms. Most of the components are integrated into an optimized ceramic QFN package and these packages simplify the design process and reduce board space while delivering robust performance for next generation aerospace and in many defense applications such as satellites and avionics systems. According to an estimate from BCC Research, the global satellite communications market, one segment of the aerospace and defense industry, is estimated to reach nearly $7.5 billion by 2022, up from nearly $4.6 billion in 2017, or a compounded annual growth rate of 11 percent.

3. Impact of varying taxation across markets: Multinational organizations are impacting by tax policies in each of the geographies where they are present. To the extent the tax laws and regulations in these various countries and localities change, their tax liability in general could increase. For example, Skyworks subsidiary in Singapore receives a tax holiday that is expected to be effective through September 2020. Changes in the status of this tax holiday could have a negative effect on the net income in future years.

Economic

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Social

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Technological

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Legal

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Environmental

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