Skyworks Solutions Inc. (SWKS - Free Report) unveiled a new suit of network-driven solution that supports wireless 5G networks called Sky5.
Sky5 solution is a platform that deals with revolutionary 5G applications. According to the press release, “Our Sky5 solutions will address new 5G waveforms and spectrum, enhanced carrier aggregation, dual connectivity (4G/5G) and massive MIMO requirements while delivering unmatched levels of integration and performance, all underpinned by Skyworks’ intellectual property, operational scale and financial strength.”
Advantage of 5G
Its common knowledge that 5G has achieved rapid momentum over the past year. In the near future, operators will likely need to support zillions of Internet of Things (IoT) devices which are expected to be wirelessly connected. This has huge technical implications, and its implementation will entail huge time and costs.
5G, which marks a revolution in the field of communications and technology, is anticipated to accumulate connections starting 2020. By 2021, there should be 25 million 5G connections worldwide. Moreover, 5G mobile handsets will be available for sale in the market by 2020, following a broader rollout of the technology.
Moreover, per May 2017 Research and Markets report, the 5G network infrastructure market is expected to grow at a compounded annual growth rate (CAGR) of 70% between 2019 and 2025. This will ultimately account for $28 billion in annual spending by the end of 2025.
The 5G network will provide 50 times the throughput of the currently available 4G LTE network. Further, 5G technology is designed to be more power efficient than any other standard wireless network. Consequently, such 5G-enabled solutions are likely to last longer than their 3G or 4G counterparts. Consequently,Skyworks is well-positioned to capitalize on the 5G based infrastructures with a rising demand for high-performance analog solutions in new markets.
The manufacturer of high performance analog and mixed signal semiconductors’ strength is further intensified by increased demand for highly integrated solutions as customers implement the next level of functionality for higher bandwidth.
With a customer base comprising the likes of Cisco in MIMO gateways, Nintendo in its Switch Gaming console; Fitbit, Garmin and LG, the company is on strong growth trajectory. Notably, the upcoming 5G upgrade cycle is also a major positive.
Skyworks’ shares have returned 29.9% in a year, substantially outperforming the industry’s rally of 22.7%.
However, customer concentration remains a risk as a significant portion of Skyworks’ revenues comes from a handful of customers, particularly Apple. Moreover, slow growth rate of the smartphone market and piled up inventories with Chinese smartphone providers remain headwinds.
Zacks Rank and Stocks to Consider
Skyworks currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Broadcom Limited (AVGO - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials, NVIDIA and Broadcom have a long-term expected EPS growth rate of 12.7%, 10.3% and 13.8%, respectively.
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