Wireless chips maker Skyworks Solutions (NASDAQ: SWKS) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 6.6% year on year to $965 million. On top of that, next quarter’s revenue guidance ($1.02 billion at the midpoint) was surprisingly good and 13.9% above what analysts were expecting. Its non-GAAP profit of $1.33 per share was 7% above analysts’ consensus estimates.

Is now the time to buy SWKS? Find out in our full research report (it’s free).

StockStory’s Take

Skyworks Solutions’ second quarter results reflected broad-based strength in both its Mobile and Broad Markets segments, with management attributing the performance to healthy sell-through at its largest customer and new Android product launches. CEO Philip Brace highlighted that “strong demand for our products”—particularly from the top customer—drove above-seasonal results, while ongoing operational discipline supported robust free cash flow and shareholder returns. Management also noted that Broad Markets, spanning edge IoT and automotive, contributed to sustained momentum, with six consecutive quarters of growth as inventory normalization continued across key verticals.

Looking ahead, Skyworks Solutions’ guidance reflects management’s expectation of continued growth in both Mobile and Broad Markets segments, underpinned by rising RF content from internal modem adoption and accelerating AI features in smartphones. Brace emphasized that “the first wave of AI-capable phones is reaching scale and early demand signals are encouraging,” suggesting potential for an inflection in smartphone upgrade cycles. The company is also investing in WiFi 8 and scaling its automotive business, targeting more durable revenue streams through design wins with global OEMs as vehicle connectivity expands.

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to stronger-than-expected mobile demand, ongoing diversification in Broad Markets, and operational efficiency initiatives.

• Mobile segment resurgence: Skyworks experienced higher-than-anticipated demand at its largest customer, supported by strong smartphone sell-through and new Android device launches, resulting in mobile revenues outperforming typical seasonal patterns.

• AI features boosting RF content: Management pointed to the initial rollout of AI-capable smartphones as a catalyst for increasing radio frequency (RF) content per device, with Brace noting that “higher RF complexity with AI features” presents a long-term growth opportunity as more advanced connectivity becomes standard.

• Broad Markets expansion: The Broad Markets business, including edge Internet of Things (IoT) and automotive, showed sequential growth, with management citing increased customer engagements and momentum in design wins across sectors such as automotive telematics and WiFi 7 applications.

• Manufacturing consolidation: Skyworks announced the closure of its Woburn manufacturing facility, consolidating operations into Newbury Park to drive higher utilization, lower fixed costs, and set the stage for future gross margin expansion through a more advanced product mix.

• Operational discipline: Free cash flow remained strong, aided by “disciplined working capital management.” The company returned $430 million to shareholders, reflecting a focus on balancing future investments in R&D with prudent cost control.

Drivers of Future Performance

Management expects growth to be driven by increased RF content in smartphones, expansion in automotive and IoT, and operational efficiency gains.

• AI-driven smartphone upgrade cycles: Management believes that the integration of intuitive AI features in smartphones will eventually accelerate replacement cycles, driving higher volumes and greater RF content per device as the internal modem transition expands Skyworks’ addressable market.

• Broad Markets as a growth engine: The company is investing in next-generation technologies like WiFi 8 and expanding automotive design wins, viewing these segments as supporting a more stable growth profile and higher gross margins relative to mobile.

• Manufacturing and cost optimization: Facility consolidation and targeted R&D investment are expected to improve gross margins over time, but management cautioned that the benefits will phase in gradually, with disciplined operating expense growth remaining a priority.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely watch (1) the pace of AI-enabled smartphone adoption and its impact on upgrade cycles, (2) continued momentum in Broad Markets, particularly automotive and edge IoT design wins, and (3) progress on manufacturing consolidation and resulting margin improvements. Execution on new WiFi platform investments and operational efficiency will also be key areas of focus.

Skyworks Solutions currently trades at $71.70, up from $67.68 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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