The Story
To put it simply, Skyworks Solutions (NASDAQ:SWKS) manufactures semiconductors used in smartphones and various other devices. In Skywork's most recent 10-k they list Amazon, Apple, Arris, Bose, Cisco, DJI, Ericsson, Foxconn, Garmin, Gemalto, General Electric, Google, Honeywell, HTC, Huawei, Itron, Lenovo, LG Electronics, Microsoft, Motorola, Netgear, Northrop Grumman, OPPO, Rockwell Collins, Samsung, Sierra Wireless, Sonos, Technicolor, VIVO, Xiaomi and ZTE all as customers of their products.
At first glance, it appears as though Skyworks has a very diversified customer base. However, that is not the entire story upon further investigation. Reading deeper into the 10-K, one quickly finds out that a few customers, mostly Apple (AAPL), account for a large portion of Skywork's revenue. Apple accounted for 47% of Skywork's revenue in fiscal 2018, up from 39% and 40% in 2017 and 2016. Samsung accounted for 12% and 10% of revenue in 2017 and 2016, but less than 10% in 2018 (they only disclose customers that make up more than 10% of overall revenue. Apple was the only one in 2018). Skywork's reliance on Apple increased significantly in 2018. With Apple's own iPhone sales actually decreasing in 2019, Skyworks could face a tough road ahead in the smartphone space.
Perhaps fortunately, Skyworks plans to capitalize on the transition in the wireless networking space to 5G. The company lists four new markets they're concentrating on in their investor presentation.
Source: Skyworks Investor Presentation
The four markets they mention are automotive, connected home, smart audio, and internet of things. These markets do provide new opportunities for Skyworks, but they are not without competition and only one of these, automotive, could significantly help transition the company away from heavy reliance on Apple. As 5G begins to roll out the company is positioned well, as they've been developing 5G tech for some time now.
