Irvine-based Skyworks Solutions Inc. has finalized its takeover of smaller rival Qorvo Inc., creating a semiconductor company valued at $22 billion. The completion of the deal, announced by Skyworks on October 5, is intended to strengthen the company’s ability to compete in the international market.
Skyworks Chief Executive Phil Brace stated on October 5 that the combination aims to "deliver more integrated, system-level solutions and accelerate the next generation of connected technologies." Brace will continue as chief executive and president of the Irvine company. Bob Bruggeworth, former CEO of Greensboro, North Carolina-based Qorvo, along with two other former Qorvo directors, have joined Skyworks’ board. The combined entity will continue to operate under the Skyworks name and trade with the SWKS ticker.
The newly formed company possesses approximately 8,000 engineers and holds more than 12,000 issued and pending patents. Skyworks stated the merger significantly broadens its addressable market, moving beyond mobile devices to include defense and aerospace, data centers and networking, automotive, and other connected technologies. Skyworks designs radio frequency chips used in communications, smartphones, data transmission, and wireless technology.
The company described the merger as establishing a platform that encompasses physical AI, connected edge computing, defense and aerospace systems, data center and networking infrastructure, and automotive functions. Skyworks anticipates achieving $500 million or more in savings over the next three years from this integration.
Skyworks is scheduled to report its fiscal fourth-quarter results and provide financial guidance on November 3. Analysts cited by Yahoo Finance expect the company to report fiscal fourth-quarter revenue of $1.04 billion, a slight decrease from $1.1 billion reported a year ago. On October 8, Skyworks Solutions shares closed at $80.75, resulting in a market capitalization of $19 billion. This marks a 27% increase since the beginning of the year, although the price is down 50% compared to five years earlier. While Skyworks Solutions stands as the largest publicly traded technology company based in Orange County, it is smaller than other chip companies with a significant Irvine presence, such as Palo Alto-based Broadcom, which has a market cap of $1.8 trillion.
The company's sales are heavily reliant on Apple, which accounts for about 60% of its chip business, presenting both a strength and a potential vulnerability. The merger initially faced regulatory scrutiny from the Federal Trade Commission (FTC) due to both companies being major suppliers of RF semiconductors. These regulatory issues have since been resolved.
Following the merger's completion, analysts offered varied outlooks on Skyworks' future. B. Riley of Los Angeles shifted its rating from neutral to buy and raised its price target to $107 per share. Conversely, Bank of America moved its Skyworks target up to $78 but maintained an Underperform rating. KeyBanc expressed concern that a general weakness among major phone makers could counteract any gains from new content.
CNBC stock market commentator Jim Cramer, hours after the announcement, told viewers the combined chipmaker was worth owning. He acknowledged that the cellphone chip sector has been challenging within the semiconductor market. Cramer noted Skyworks "finally closed the deal with Qorvo" and expressed his view that the combined entity would be "a pretty good company," suggesting viewers "can buy Skyworks Solutions right here." Still, he added that the cellphone chip space "has been a bad area."
