Skyworks Continues to Gain Traction with Holistic Growth

On Sep 16, Zacks Investment Research updated the research report on leading semiconductor manufacturer Skyworks Solutions Inc. SWKS.

Skyworks continues to capitalize on three business segments -- mobile Internet, vertical markets and analog components. As demand for mobile Internet applications is exploding with the broad proliferation of smartphones, net books, note books, caplets and other forms of embedded wireless devices, Skyworks continue to gain traction. Impeccable quality, environmentally friendly products and sustainable business practices have been the key differentiators for the company in this competitive environment.

Skyworks also aims to invest in diversified analog markets, while capturing more value through custom system solutions, which will enable it to drive above-market top-line growth. The company is aggressively expanding into new vertical markets. It is investing heavily to increase its footprint in traditional analog segments like automotive, like medical and industrial. These are highly attractive markets with longer product life cycles, fewer competitors and higher margins. Skyworks participates in these markets by leveraging core analog and mixed-signal design capabilities and a broad-based product catalog.

The market for smartphones is reportedly growing at four times the growth rate of the traditional cellular handset. The rising RF dollar content and increasing complexity associated with the proliferation of smartphones and an array of other mobile Internet devices are fuelling the total available market TAM growth, providing a unique opportunity for Skyworks to expand. The company is engaged in media gateway design for a leading network operator, which provides the functionality of a traditional set-top box with enhanced capabilities to support home networking and streaming on-demand video. Skyworks aims to provide a complete analog connectivity solution, driving content expansion and an opportunity to differentiate through system customization. This augurs well for its long-term growth.

At the same time, the company has mitigated operating risks through diversification of business verticals. Skyworks has multiple connectivity technologies in a growing array of non-mobile applications. Additionally, Skyworks is well positioned to capitalize on the Internet of Things (IoT) with a rising demand for high-performance analog solutions in new markets. Skyworks expects to gain more businesses going forward, with continued investments in research and development to increase its IoT portfolio. As per market estimates, the growth within the Internet of Things market is likely to exceed that of other connected devices over the next 5 years with  predictions of as many as 50 billion connected devices by the year 2020.

Consequently, we expect this Zacks Rank #2 (Buy) stock to have solid operating results in the future.

Other stocks that look promising and are worth a look now in the industry include Pixelworks, Inc. PXLW, Applied Optoelectronics, Inc. AAOI and EZchip Semiconductor Ltd. EZCH, each carrying a Zacks Rank #2 (Buy).

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