Apple (AAPL) supplier Skyworks Solutions (SWKS) saw its stock drop nearly 25% Thursday as the semiconductor firm said that it’s losing business with the iPhone maker to one of its competitors, which analysts believe to be Broadcom (AVGO).
Skyworks makes chips used in Apple devices that are crucial for wireless communication. According to the company, Apple accounted for 72% of its roughly $1 billion in revenue for the December quarter. And 85% of that revenue from Apple was from sales of Skyworks components for Apple’s iPhone.
While Skyworks’ quarterly results Wednesday after the bell topped Wall Street analysts’ expectations, CFO Kris Sennesael said in a post-earnings call that Apple is now dual-sourcing chips that it had solely sourced from Skyworks. Apple’s move to dual-source radio frequency components for the iPhone 17 would reduce its demand for Skyworks’ products by 20% to 25%, Sennesael said. Stifel, Raymond James, and TD Cowen analysts believe Apple’s second supplier is Broadcom.
“Despite our rich product offering, we did not get the result that we targeted,” Sennesael said. “While we are disappointed with this outcome, we remain steadfast in our commitment to invest and innovate around our technology road maps.”
Skyworks had already lost a chunk of its business with Apple to Qualcomm (QCOM) last year, Stifel analyst Ruben Roy noted Thursday, downgrading the stock to a Hold rating.
TD Cowen analyst Krish Sankar said in a note to investors Thursday that Apple’s latest move could have a $600 million impact on Skyworks’ 2025 revenue. That’s no small potatoes for Skyworks, which saw revenue of $4.2 billion for the full year in 2024. Sankar maintained his Hold rating on the stock.
Meanwhile, Roy said the company gaining back share of Apple orders “is not a likely event” until Apple fully shifts to making its own 5G modems for its iPhones, rather than using Qualcomm’s, which would present a further revenue opportunity for Skyworks.
Citi analyst Atif Malik agreed in his own note to investors.
“Apple moving to in-house modem would still be a tailwind for Skyworks as their content on internal modem is good,” he said. Malik maintained his Sell rating on the stock.
Also on Wednesday, Skyworks announced a CEO shake-up that stirred more uncertainty. The company said that former Intel executive Philip Brace will replace longtime CEO Liam Griffin.
Stifel’s Roy wrote of the change: “While we believe that Mr. Brace comes to SWKS with well-rounded experience, including a position as Executive Chairman at Inseego, which is in process of what looks to be a successful turnaround, the timing of the change given near-term dynamics raises more questions.”
