- Skyworks Solutions Inc. (SWKS) stock plummeted 25% to $64.61 after Q1 earnings revealed a significant content loss in the iPhone 17, with adjusted EPS at $1.60 and revenue at $1.07 billion.
- Apple’s (AAPL) adoption of a dual-sourcing strategy, including Broadcom (AVGO), has led to a 20-25% expected content reduction in the iPhone 17, raising concerns about Skyworks’ long-term revenue.
- The company faces additional pressures from rising R&D costs, inventory issues in the semiconductor sector, and Apple’s potential internal modem development, with stock indicators showing a bearish outlook as it broke key support levels.
Skyworks Solutions Inc. (SWKS) experienced a dramatic 25% drop in its stock price to $64.61 in early trading on Thursday, following the release of its first-quarter earnings report which highlighted significant challenges ahead, particularly with its Apple iPhone content. Despite an adjusted EPS of $1.60 surpassing estimates by $0.03, this was down from $1.97 the previous year, with revenue holding steady at $1.07 billion but down 11% from last year. The gross margin held at 46.5%, yet a 15% surge in R&D expenses year-over-year raised eyebrows among investors, especially in light of Apple’s shift to a dual-sourcing strategy that includes Broadcom (AVGO), impacting Skyworks’ exclusive content in the upcoming iPhone 17.
The revelation by Skyworks’ CFO Kris Sennesael of an expected 20-25% content reduction in the iPhone 17, following a similar loss in the iPhone 16, casts a long shadow over the company’s future revenue streams from its largest client, Apple (AAPL). This news comes at a time when the broader semiconductor industry is grappling with inventory excesses and a slowdown in electric vehicle (EV) adoption, which has dampened demand across the sector. Moreover, the uncertainty regarding Apple’s development of its own modems and Skyworks’ strategic direction under new CEO Philip Brace adds layers of caution to investor sentiment.
Technical indicators for Skyworks’ stock are signaling significant bearish momentum, with shares breaking through key long-term support levels. The stock has recently fallen below the critical $86 threshold and breached the psychologically important $70 level, marking one of its lowest valuations since 2019. This downward movement suggests a weakening technical structure and raises concerns about further downside potential in the near term. This bearish outlook is compounded by broader industry concerns, as evidenced by NXP Semiconductors (NXPI) forecasting lower-than-expected revenue due to sluggish demand from automotive and industrial sectors. These developments collectively paint a challenging picture for Skyworks, highlighting the need for a robust strategic response to navigate through this period of uncertainty and potential content recovery in future Apple products.
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