Skyworks Solutions, Inc. (SWKS) September 2026 Conference Transcript

Good afternoon, everybody. Welcome to the Goldman Sachs Communicopia and Technology Conference. My name is Jim Schneider. I'm the Semiconductor Analyst here at Goldman Sachs. It's my pleasure to welcome Skyworks and CEO Phil Brace to the stage. Welcome, Phil. Thanks, Jim. Thanks for having us. Always a pleasure to be here. Great. Phil, you are in the final stages of closing your proposed merger with Corvo. This is something the investor has been very focused on as a landmark event for the industry. I know you expect the transition to close relatively soon here. you complete the financing to permit the disclosure, where do we stand today in terms of finalizing close and any remaining conditions? Yeah, thanks for the question.

You know, pretty consistent with what we said in the last earnings call, certainly we are very confident that we're going to close this calendar year. We're preparing to close this fiscal year. And then subsequent to the earnings call, we talked about the fact we kind of issued an 8K, said that the HSR waiting periods and the waiting periods for the U.S. FTC had expired without further action. We then also went out and raised the debt at actually what turns out to be pretty good interest rates since we raised it since then. I wish to say that was with foresight, but sometimes it's better to be lucky than good. And we're just waiting right now, I would say. You know, these things are never certain, and we're kind of around the airport just waiting for permission to land. So hopefully it comes soon, and we're chomping at the bit ready to go. Hopefully we don't run out of gas.

Yes, if not. So stepping back for a moment, you know, what does success look like, say, two or three years after the close of the transaction? More importantly, more tactically, what are sort of the key milestones investors should be tracking to evaluate the success along the way?

Yeah, it's great. Look, I really think this is a transformative, you know, deal for both companies and the industry. We talked about, you know, you mentioned it in your opening remark. I mean, this company coming together really does two things. It has a scale play and a diversification play. And the scale play really gets us, you know, significantly more revenue. And then we're able to really financially do $500 million of synergies, which we get there. So we should have a, I think we're at a roughly $5.5 billion mobile business and then a, you know, $2.5, $2.6 non-mobile business. The mobile business should have higher stability, better mix, because inside the mobile business, we're going to be skewing towards more of the premium tier side. And then on the non-mobile side, we have super attractive segments like aerospace and defense, which I'm really excited about. As a matter of fact, that one could be the grabbing the tiger by the tail from that side. So two, three years from now, you'd expect us to see kind of certainly getting to our business model target, 50%, 55% gross margin, 30%, 35% operating margin, 35%, 40% EBITDA margins, very attractive capital structure, large and growing markets. And, you know, milestones to look along the way. Obviously getting to close will be one thing. OPEX synergies, how are we doing on that? We talked about $500 million total, 24 to 36 months, probably front and loaded OPEX side. The factory consolidation will take a little more time to go do that. So are we able to close? Are we able to start implementing some of these synergies? Is the broad market's growing faster than the mobile side? Are we generating some stability on the mobile business? And then, ultimately, what are we delivering the financial performance we talked about? I mean, it's an unbelievable transformative opportunity, and I just can't wait to get started.

Now, from a product and technology perspective, what are the things that the combined company can do they couldn't have done as independent standalone companies in terms of – And what does it mean for the product portfolio going forward?

Yeah, I think that's a really important question and something that we really haven't underwritten at all. I mean, when we looked at the deal and how we put it together, we really just focused on the synergies and one of the synergies we get. We haven't really talked about anything at all of what we can do at the 1 plus 1 equals 2 scenario. Some of that is because we still need to get under the covers and figure that else out. But I'll give you an example. Like if we just look at the TANSAS site today, right, Corvo, the product lines are very overlapping. They have antenna tuning, envelope tracking, and PMIC. We don't have any of those technologies. And so when you think from the receiver all the way to the antenna, you might believe that bringing thousands of RF engineers might allow us to do things differently. And we know there are certain customers today where we have 100% of the RF front end, and we know we can do things differently. So I'm excited about that opportunity. The other one is that I'm equally excited about or more excited about really is some of the GAN technology because today our technology kind of caps out at about 12 gigahertz and with GAN both power GAN and RF GAN we get up to 20-25 gigahertz which gets us into a lot of the radar and a lot of the defense space that we don't have today and you might imagine there's some cross-selling opportunities that we could have with timing products and power products in the defense space that we haven't even explored so to me there's just a tremendous runway of just opportunities both on the cost synergy side but but also as we bring the companies together to look for new innovation, new capabilities that we haven't even explored.

Now, you previously outlined the cost synergies. What about the revenue synergy side of things? You know, what is that short-term and long-term?

Yeah, I mean, look, we've been – I've been cautious about doing that because, you know, I guess, you know, Jim, I'm a meat and potatoes kind of guy. Do what I say we're going to do and deliver that, and I think it was very quantifiable to do the cost synergies. The revenue synergies are something, you know, we need to work towards. I mean, the magic of this is that we're bringing together thousands of RF engineers that are super hard to get, very talented people, and I'm just excited about that opportunity. I mentioned some of them. Can we expand our defense business? Can we really expand the combination? Are there additional things we can do on the RF side, both on the Wi-Fi and the handset side, now that we've got all the way out to the antenna tuners? Is there new capabilities we can do with our BAW filters and other capabilities as well? And then you've got the manufacturing and the assembly test. You know, what can we do with new advanced packaging and other technology that we haven't been able to do before? So, I mean, I've barely even scratched the surface. I can't wait to get our PhD engineers out talking about things and what we can do, and it's exciting. I mean, you know, at the end of the day, there's a lot of excitement about data centers, and I love our data center business as well. But it is a wireless world, and all that data center data has to get out to somewhere, and that somewhere is going to be done wirelessly. And I think we're going to be in a really good spot for that.

So now I asked you about product portfolio, but competitively, how does the merger change your position versus Qualcomm, Broadcom, Maratha, et cetera?

Yeah, look, I think this is always going to be a super competitive market, right? Our customers are not just going to hand us business. But, you know, clearly this results in a different, you know, competitive landscape, and the landscape is changing, right? And it's changing. Certainly, at our largest customer, it's changed with respect to, right, our position vis-a-vis Qualcomm and others, right? And I think that competitive landscape is changing, and that should benefit us. But it's still, you know, it's a situation where we have to execute and deliver, right? No one's going to just give us a pass just because we've consolidated with Corvo. I do think that the improved technology base should allow us to compete. And I think that one of the things that I would say that I'm going to look to do is, you know, future technology development. Today, I probably don't spend as much as I'd like to on some future technology development. And so one of the things I'm hoping to do is, you might imagine that, you know, how can I take some of the synergies that I'm going to get and actually further develop the roadmap farther out in time? And so we'll be looking to do things like that.

Yeah. So data centers emerge as one of your fastest growing end markets, along with many others. What specific problems are you solving to position the company to participate better in AI infrastructure spend? Yeah, so we've got two major, you're right, that's one of our fastest growing.

We said we're growing at least 50% year over year, and actually those businesses are supply constrained right now. We could be shipping a lot more. The book to bill is greater than one on that. Two particular areas where we've got, one of those on data center power, and this is really around power isolation. So when you think about backplane changes going from 400 volt to 800 volt, you want to make sure that power is isolated from your very expensive GPUs, and we have specific technology to do that. You know, that really comes from the heritage of the Silicon Labs acquisition we made many years ago, and they've got a long history of doing safety-related power devices, and so they've got a good track record there, and that seems to be going quite well. The other one is on the timing side, which are super high-performance, very low jitter, and jitter means how much does the clock move around. Clocks, which is super important for high-performance things. And so when you think about some of the technology here, it's like black magic, right? Femto seconds, which is light travels in a foot or something like this. It's some crazy, crazy thing. And those are really geared towards the optical 800-gig to 1.6-terabyte kind of transitions. And some of the big customers there are some of the big optical networking guys. So those are the two spots we've got. I wish the biggest businesses were bigger. They're growing really nicely. They're great. We've just got to continue to grow them. How big can it be in three to five years? Well, I mean, I think the future continues to be pretty bright. We talked about that growing greater than 50% year over year. We're ahead of that. I don't expect that to be slowing down anytime soon. So, you know, you kind of continue to grow at that space. And I think, you know, when you take that, some of those businesses combined with some of the aerospace defense business, combined with some of the auto, some of the Wi-Fi, you can really see how we can end up in a situation where we're getting into that zone where we've got 50%, 55% gross margin growing nicely and good operating income. And that's going to be part of the strategy for how we get our blended mix-up.

Okay, excellent. Ten minutes in, we haven't talked about smartphones yet, so let's do that. That's a pretty large part of your business today. Talk about some of the dynamics you saw in smartphones in the first half of the year, how you think that plays out into year-end.

Yeah, look, I think that, and it's funny you say the beginning part of the year, I think I'll probably always remember the, you know, CES of 2026. It was kind of, that was the day that the memory, all the memory issues came to its head, and I think I've been dealing with memory issues ever since that time. You know, and every quarter we've done nothing but, you know, beat expectations and continue to guide how to plan. You know, we've been fortunate. If you look at where we played, mostly it's in the premium handset space, and I think our largest customer has done a really good job of actually, frankly, gaining share versus Android in that space and that actually should benefit us in the long term. The more devices that are in the iOS ecosystem, the better it is long term for us because you think there's probably 1.2 to 1.5 billion devices out there and the refresh rate is anywhere, you know, four-ish years. Well, any sort of shrink of that refresh rate It just results in lots more units that we can refresh. So that one's been going pretty well, and I think that our guide reflects that continued strength. So from us, we haven't seen some of the other turbulence that other people have, primarily because of our exposure to the premium segment.

Past wireless cycles, every several years, there's usually a moment where our content sort of spikes upward. Do you think an on-device AI could be that inflection point, someplace where uplink complexity and build material starts to step up again? Yes, and we have seen it.

And this is one thing that's important to note. I think in the past call I talked about a multi-generational design one with a large U.S. Android provider that takes us through 2030, probably products that are shipped in 2031. That was significant for a couple of reasons. One, the customer had belief in our technology through that time. Two, we had partnership with another baseband provider, which demonstrates that collaboration that we have. Three, we have visibility through that. And then four, we see that RF increase. And we see it today. We see it with increased filters, increased transmit power, more op-link channels, direct-to-satellite lengths, and then that's not even before you get to increased power levels and PC2 and 6G. So we're seeing it today. So for the first time in many years, we're seeing increased RF complexity driven by some of the things you talk about.

If your largest customer continues to use a larger share of internal modems on their products in the coming quarters, what does that mean for you on content on the margin, more or less?

Generally, that's a tailwind because when they use external modems, there was certain products that were bundled with them. so generally it's a tailwind to do that but once they transition completely off that then that effective that relative tailwind is behind us but I think for us when we look at what we're trying to do in the mobile segment it's really continue to focus on the premium tier so we'll have Android continue to win off our largest customer the more that they use their internal modem the better it is for us the more technology that they put in there in terms of transmit capability and all those things should be a tailwind for us as well Got it.

I mean, you sort of addressed this before, but if you take that kind of multi-generational design when you mentioned ramping fiscal 20 to 30, you talked about a billion-dollar opportunity there. Where does that wind tell you about your portfolio and about content trends in the premium market? Yeah, I think it tells us a lot.

I mean, first off, I would say that one particular customer is astute in that they recognize that there's opportunity costs that some of their partners have for their engineers and their capabilities and their talent. So for them, this is also about securing a partnership with us for a long period of time. So it's a mutually beneficial relationship, and we work really, really hard at it. In many ways, their products are excellent products. And so we've been working closely with them. I think it says a lot about our technology, our capabilities, and what we want to do, and I think it bodes well for us.

And then if we set aside any one individual platform, what are the structural drivers of content growth at the premium segment over the next few cycles, especially in terms of the modes of wireless communication you see playing out, and especially if we finally do get AI at the edge?

Yeah, I think that what we see, one of the biggest things that we see is much more transmit capability coming. And I think that's due to a couple of reasons. One, more things are being uploaded to the cloud, right, or to the AI work models or other things like that. The other thing we're happening is it looks like it turns out that, for those that aren't familiar with this technology, the transmit side on the phone is actually what determines how far you can stay within the tower. You know, when you think about microphones and speakers as analogies, microphones are on the received side. You don't need a lot of power, and you can have pretty sensitive microphones with not a lot of power. The speakers are the things that communicate to the tower. And those take up a lot of power. And so figuring out how to improve the transmit efficiency really defines how much bandwidth you can get back and forth to the tower. And so there's a lot of focus on that, and I think that that's one of the technology drivers we see that certainly is tied to AI at the edge and workloads and things like that. The more complex workloads, the more upload you're doing, the better it is for us.

Okay. Broad markets, your diversified analog business. That's been a pretty solid outperformer the past several quarters. To sort of level set people, can you just break down that business in terms of the largest buckets of revenue in that business and sort of what they constitute and maybe how your portfolio may be different from some of your analog peers that are more kind of like even broader based than that?

Yeah, I think our last quarter, the broad business was about 43% of our business, so it's a meaningful part of the business. Two-thirds of that are what I would call strategic growth engines. A third of it today is kind of more consumer IoT-focused stuff, which is a little bit of a drag on the growth today. But it's okay for us to be diversified there. Inside the growth areas, we've got Wi-Fi, which is a big business there. Wi-Fi tends to be in waves, right, with the Wi-Fi 7, Wi-Fi 8. Today we're in the middle stages of the Wi-Fi 7 ramp, seeing very good adoption. And what drives that technology is things like dual-band, tri-band, quad-band, more power, things like that. so we see that to be a good tailwind. Automotive, we play in the infotainment space and vehicle-to-vehicle connectivity, which is kind of a sweet spot. We're not huge in autos from the grand scheme of things, but do you think autos will have more connectivity as time goes on? Yes. Do I think they'll look more like computers as time goes on? Yes. So that seems to be going well. And then we've got the data center side, which is power and timing we talked about. And then the combination of Corvo that gives us the defense side, which I think for me, it could be grabbing the target by the tail.

Yeah, so I'm excited about that one. So of those sub-segments, you know, where do you see the most upside, or is it kind of too early to say, and like, you know, obviously Data Center and Automotive have done pretty well, but do you expect that kind of...

Yeah, the Data Center is going to continue to grow, I think for me, is how to get that one bigger, and I think that, you know, we'll continue to invest there to grow that. I think that that business comes from a heritage of Silicon Labs that was mostly focused on the industrial side. And up until about a year ago, we shifted all the R&D towards the data center side. So we really haven't yet seen the payback for some of those investments. So I'm looking for that one to continue to grow. You know, the combination with Corvo, right, I'm definitely most excited about the defense space. I think that one just opens up a whole new segment for us that has grown like crazy. And as I said, I think we could have grabbed the tiger by the tail on that one.

Yeah. So you mentioned aerospace and defense. Obviously, very strong growth area for everybody, especially for Corvo. So, I mean, how are you thinking about that business in terms of the combined portfolio? Specifically, are there areas where you could actually accelerate the organic product portfolio? and I guess maybe talk about kind of an incremental kind of like traditional M&A that you could do to kickstart that portfolio.

Yeah, I think it's early days, right? But that's an area, you know, we haven't done integration planning, so we haven't yet got into the whole details yet. But you might imagine, I mean, we just talked about some of the power products and some of the timing products we have that Corvo2Day doesn't have. Well, gee, is there something, I mean, those customers need power products and they need timing products. I mean, maybe there's something we can or should do there. We have unique BAW capability, differentiated BAW capability. Maybe there's some interesting filter capabilities that we can do there. They bring some of the GAN technology that we don't have that opens up frequency bands that we don't have. So, you know, I'm most excited about bringing those thousands of engineers together to see what we can do. I mean, that's where some of the magic is.

Final part on the broad market business. You mentioned Wi-Fi. Where are we in sort of the Wi-Fi 7 upgrade cycle? What's kind of like the right content uplift from 6 to 7? And how do you think about the competitive environment in Wi-Fi specifically?

We're probably in the middle inning. So the nine-inning baseball game, we're probably in inning five or six. Middle innings of that, I think that's been going well. The contact uplift has been meaningful double digits per access point, primarily because when you think about just going from two bands to three bands and then more power. And so as we look to Wi-Fi 8, I think we're going to have additional content up lists from there. So that was good. The competitive dynamic there, you know, we partner while we are basically the front ends for, you know, Broadcom and Qualcomm and MediaTek is kind of how we work. And so we partner with them. It's a very competitive environment, but I think it's certainly the combination with Provo. I think the competitive landscape changes a little bit, and so we're looking forward to that.

Great. Maybe a few numbers questions to close out. I was wondering if you maybe recap the financial model you laid out when you announced the transaction. We're sitting here just under a year after you announced it. Help us understand, first of all, the long-term growth rate you think that you can achieve given the business mix across mobile and broad markets.

Yeah. So we laid out at the top level, we laid out, you know, a business that's growing mid-high single digits, and we've got two major segments. We'll have the mobile segment that we've had low to mid single digits, relatively low, modest growth rate. What are we assuming there? We're assuming nominal unit growth rate. We're assuming decent content uplift, offset by ASP pressures and Android decline. Kind of what we're assuming in that rate. That can go plus or minus, but it's not a heroic assumption. On the broad market side, we're assuming kind of low double digits, and that's assuming good growth in the core growth areas and then offset by some of the more consumer-oriented that I talk about, and you end up with kind of a mid-single-digit kind of grower, 50-55% gross margin, 30-35% operating margin, and 35-40% EBITDA margin. Very favorable capital structure, throws up a lot of cash, and I think we're going to be in a really good spot. It should really result in really good EPS growth over time.

Yeah, and I think Corvo report gross margins of 52.5%. eight last quarter? I mean, how does that bridge to the 50-50s I've just talked about for the combined company, tailwinds and headwinds from here, variable cost, input cost, et cetera?

Yeah, so, I mean, if you look at, obviously, I don't, you know, Corvo's still an independent company yet, just got to look at their public financials, but I think what they've talked about is the Android business is going down, right, which is very low margin, and it's kind of been swapped out with high-margin defense business, which is a trade I'll make every single day, right? So I think that that mix alone should help us. You know, you point out, I mean, so when we think about gross margin mix, inside the mobile side, which is structurally lower than the gross margin side, but inside the mobile side, we're going to have a mix shift there towards the premium side. And then on the broad market side, we're going to add on defense and aerospace, which also should bring the mix up there as well. So we've got some mix-related items. And then we've got the growth of the broad markets business, which should expand, grow past the cell phone business. Headwinds, good you asked. You know, I think one of the headwinds certainly has been input costs, right? That's been something that's been pressuring our gross margins. I've been actually really proud of the team, the way we've handled that. And we've done a lot of different mitigation things. We've got to do that, including price increases where we can, expedite fees and longer lead time stuff. But, you know, that's just a headwind that we probably didn't expect from a year ago. And our go-route forward model kind of assumes that that will continue to be, and we're just going to need to work. That's something we're just going to need to battle every single day.

Now, overall, I think you pointed a picture where you expect it to be, the transaction to be accretive to gross margins, off margins, and earnings. You talked about $500 million in planned cost synergies. What has changed from a synergy perspective since you announced that revenue or costs, as you've kind of sharpened your pencil and worked through the proposed innovation details? Yeah, I think my confidence in the synergies has gone up. I think I really believe that we've got a really good opportunity to meet those.

And you might imagine I've got some internal targets on that, but I'm a meat and potatoes kind of guy. I'm just going to do what I say we're going to do, and as soon as we get in there, we'll start delivering the numbers and then see where we go from there. But my confidence has gone up a lot, and I think some of the other structural things we talk about, about them even before we started. Both of us have already started doing some, we'll call it, pre-synergizing work, such that when we hit the ground running, we're already going to be at a run rate where we should be better than either company was previously when you had them together. So I think I feel good about that. You just have to stay tuned. Measure us on how we've done our results.

Exactly. Cap allocation. You announced recently a new framework for that. Flick and Buying Company, $2 billion of new share repurchases, but a decision not to to clear a quarterly dividend going forward. Maybe help us understand the board's thinking on that point and how you weigh share of purchases, deleveraging an M&A from here. And specifically, should we expect more kind of diversifying M&A in the broad market?

Yeah, that's a good question. That was something I personally spent a lot of time on. We had external advisors give us advice on. It was a recommendation I made to the board, and the board supported my recommendation. you know part of it was you know it was a multi-faceted uh evaluation of of where i think we needed to go and i think one of it came back to for me it just became very very clear that it's much more creative and if i did nothing but just buy back my stock with the dividend money it's way more creative and in fact i went back and looked at at older material and i think if you just did the math even through the ups and downs it would be way more creative to do that And, you know, we were trading at a dividend yield, something like 4.75% or something like that, like something, you know, approaching Chevron dividend yields, which just wasn't there. And so when I looked at the capital allocation, I think we are going to be biasing towards, certainly towards buyback. And then for M&A, look, both companies, both Corvo and Skyworks have been in the same cul-de-sac for a decade or more, right? There's several companies that look like us 15 years ago. And I think that we would be better off looking for a creative M&A that will help us to continue to grow the gross margins and diversify our base, right? Keep in mind that, you know, I'm not going to be, I'm going to be very focused on doing things in a disciplined fashion, measured fashion. And I think that should we deliver these synergies we talked about here, I think we're going to get, I think we're going to get investor support. And I think the, you know, stock price post that, post that decision is kind of reflective of us getting some support from some major long onlys. So I feel good about it. Okay, excellent.

So last question, very big picture. If we're sitting here on stage five years from now, investors look back, what's the one thing they could be surprised about? They wish they bought more stock today.

I don't know.

Maybe some of them would be very happy.

Yeah, well, that's the idea, right? I'm not here to keep things the same. I am singularly focused. I think one of the things that surprised me, I guess, coming in, you know, I started on this particular transaction. If you look at some of the changes we've made in 18 months, right, six quarters in a row being raised. in the biggest deal the company's ever done, transformative deal, change the cap allocation of the company. You know, I am singularly focused on growing the stock price. I wasn't by here to do anything else. And, you know, I'm just not going to sit still. So, and I'm just going to execute and deliver one step at a time. You're not going to see me chase butterflies and I'm not one of these hyperbilly guys, but I'm just going to show up and deliver and do the work every single day. And, you know, that's what we're going to do. Excellent.

I think we're looking forward to see what's next for the company. Yeah, that's great. Thanks, Bill, for being here. Thank you so much.