Skyworks Solutions (NASDAQ:SWKS) reported fiscal third-quarter revenue and non-GAAP earnings above the midpoint of its guidance, while outlining progress toward its proposed combination with Qorvo and a revised capital allocation strategy for the combined company.
For the June quarter, Skyworks generated revenue of $935 million and non-GAAP diluted earnings per share of $1.08, which Chief Executive Officer and President Phil Brace said was $0.05 above the midpoint of the company’s outlook. Revenue from mobile represented 57% of sales, while broad markets accounted for 43%.
Qorvo transaction advances
Brace said regulatory reviews of Skyworks’ planned Qorvo combination were continuing to progress. In China, the review has advanced to phase three with the State Administration for Market Regulation, or SAMR, which Brace described during the question-and-answer session as the final stage of that process.
The company is working with regulators in the remaining jurisdictions and is now optimistic that the transaction can close within calendar 2026. Skyworks is preparing for a closing as early as its current fiscal year, although Brace noted that the deal remains subject to regulatory approvals and customary closing conditions.
In preparation for a potentially earlier closing, Skyworks anticipates raising approximately $2 billion in debt financing in the near term, subject to market and other conditions. Carter said the company ended the June quarter with approximately $814 million in cash and investments and $497 million in debt, after retiring $500 million of notes that matured during the period.
Skyworks also announced the expected leadership team for the combined company. Carter is expected to serve as chief financial officer, while Qorvo President and CEO Bob Bruggeworth is expected to join the combined company’s board of directors. Brace said the company’s integration planning remains on track and that management continues to expect at least $500 million in synergies.
Dividend discontinued as buyback program expands
The board approved a new capital allocation framework for the combined company that emphasizes stock repurchases, debt reduction and strategic acquisitions. As part of the change, Skyworks will no longer declare a quarterly dividend.
The company replaced a repurchase authorization that had been scheduled to expire in February 2027 with a new $2 billion share repurchase program expiring in January 2029. Brace said the new approach is intended to provide greater flexibility and direct capital toward what management considers higher-return uses.
“We determined that we would allocate that capital towards both share repurchases, de-levering the balance sheet, and strategic opportunistic M&A,” Brace said in response to an analyst question about ending the dividend.
He added that the company is focused first on closing and integrating the Qorvo transaction. Over the longer term, management expects diversification-oriented acquisitions to remain part of its strategy, while maintaining discipline around returns and potential accretion.
Broad markets growth offset by consumer softness
Broad markets revenue was approximately $403 million, up 8% from a year earlier. Skyworks said its Wi-Fi, data center and automotive businesses represented nearly two-thirds of broad markets revenue and collectively grew 15% year over year.
Brace said demand in those growth areas is running ahead of the company’s available supply. AI data center was the company’s fastest-growing business and was tracking ahead of the more than 50% annual growth rate discussed in the prior quarter, despite supply constraints. The company cited demand for high-speed connectivity, precision timing and advanced power-delivery products as data centers move toward higher data rates and higher-density architectures.
Wi-Fi 7 adoption continued, while the company said it is collaborating with customers on Wi-Fi 8. In automotive, Skyworks cited demand tied to connected vehicles and infotainment systems, as well as engagements with global automakers and tier-one suppliers on multiyear vehicle platforms.
However, Brace said strength in the growth engines was partly offset by softness in more consumer-exposed areas of the broad markets business, including consumer IoT-related devices.
September-quarter outlook
For the fiscal fourth quarter, Skyworks forecast revenue of $1.01 billion to $1.06 billion. At the midpoint of $1.035 billion, the company expects non-GAAP diluted earnings per share of $1.27, based on an estimated 152 million diluted shares.
- Mobile revenue is expected to increase sequentially in the high-teens percentage range, supported by seasonal product launches at Skyworks’ largest customer.
- Broad markets revenue is expected to grow approximately 5% year over year and represent about 39% of total sales.
- Gross margin is expected to be between 44% and 45%, reflecting a seasonal shift toward mobile and continued input-cost pressure.
- Operating expenses are expected to range from $235 million to $245 million.
During the June quarter, gross margin was approximately 45%, while operating income was $182 million, or a 19.4% operating margin. Carter said rising input costs remained a headwind and are expected to persist into the September quarter. The company is pursuing cost reductions and selective price increases, primarily in broad markets, where products can have longer lifecycles and more pricing flexibility.
Brace said mobile demand signals remain stable, channel inventories are lean, and the company’s guidance reflects its current view of customer demand and inventory conditions. Looking further ahead, he said Skyworks sees increasing RF complexity from higher uplink demands, expanded receive paths, satellite connectivity and other changes that could support higher RF content in devices over time.
About Skyworks Solutions (NASDAQ:SWKS)
Skyworks Solutions, Inc is a leading semiconductor company that designs and manufactures analog and mixed-signal semiconductors for use in radio frequency (RF) and mobile communications markets. The company’s portfolio includes power amplifiers, front-end modules, switches, filters, low-noise amplifiers, and other components that enable wireless connectivity in smartphones, tablets, wearables, automotive telematics, and broadband infrastructure. With a focus on energy efficiency and integration, Skyworks serves a broad range of customers in the mobile, Internet of Things (IoT), automotive, connected home, and industrial end markets.
Headquartered in Irvine, California, Skyworks operates a network of design, development, and manufacturing facilities across North America, Europe, and the Asia-Pacific region.
