Skyworks Solutions Stock Plunges 25% as Apple Diversifies Chip Suppliers

Skyworks Solutions (SWKS), a key supplier to Apple (AAPL), has witnessed a significant stock drop after disclosing a loss in business to a rival. The semiconductor firm has confirmed that it is losing a portion of its business with Apple to a competitor, believed by analysts to be Broadcom (AVGO).

SWKS produces chips for Apple devices that are essential for wireless communication. The company noted that Apple generated 72% of its $1 billion revenue in the December quarter and 85% of that revenue was attributed to iPhone components.

Despite surpassing expectations in its quarterly results, SWKS's CFO Kris Sennesael revealed in a post-earnings call that Apple is now dual-sourcing chips previously sourced exclusively from Skyworks. This shift by Apple to diversify its suppliers for iPhone 17 radio frequency components could result in a 20-25% reduction in demand for Skyworks' products, according to Sennesael.

Analysts from Stifel, Raymond James, and TD Cowen speculate that Broadcom is Apple's second supplier. "We did not get the result that we targeted," Sennesael stated. "While we are disappointed with this outcome, we remain steadfast in our commitment to invest and innovate around our technology road maps."

Skyworks has previously lost a portion of its Apple business to Qualcomm (QCOM) last year, as highlighted by Stifel analyst Ruben Roy, who downgraded the stock to a "Hold" rating. TD Cowen analyst Krish Sankar estimates that Apple's recent move could impact Skyworks' 2025 revenue by $600 million, a significant setback for the company that generated $4.2 billion in revenue for 2024. Sankar maintains a "Hold" rating on the stock.

Meanwhile, Roy believes that Skyworks regaining Apple orders is unlikely until Apple shifts towards producing its own 5G modems for iPhones, replacing Qualcomm's modems. This would provide a revenue opportunity for Skyworks. Citi analyst Atif Malik echoes this view, suggesting that Apple's transition to in-house modems would benefit Skyworks due to their potential content on internal modems. Malik maintains a "Sell" rating for the stock.

Skyworks also announced a CEO shake-up, further contributing to uncertainty. Philip Brace, a former Intel executive, will succeed Liam Griffin, who has been Skyworks' CEO for a substantial period.