Skyworks Solutions is a semiconductor company that produces radio frequency chips and power amplifiers used in wireless devices. The presentation argues that Skyworks is well positioned to benefit from the growth of the Internet of Things and expansion of the LTE market globally. While Skyworks derives a significant portion of its revenue from Apple, the company has been diversifying its customer base. The presentation provides an overview of Skyworks, an investment thesis, valuation analysis, and risks.

1. Skyworks
Solutions(SWKS)
Kyle Waters | Jacob Zurita | Campbell Blue
February 29, 2016
Boston College Investment Club
Buy Pitch
1September 15, 2016

2. Agenda
Company Overview
Investment Thesis
Valuation
Risks
Summary
Questions
2September 15, 2016

3. Company Overview
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
Company Information
• Semi-Conductor Industry
• Tech
• Chip Making/Analog
Semiconductor/ Radio
Frequency Control/ Power
Amp. Modules
• Wireless Communications Tech.
• Competitors: Intel, Linear
Technologies, Analog Devices
• Woburn, MA
• North America, Japan, Asia,
Europe
Stock Information
• Stock Price: 64.90
• MKT Cap: 12.44 Billion USD
• Dividend in 2015= $0.66/share
• P/E: 13.20
• P/B: 3.57
• EV/EBITDA: 8.50
• Beta: 1.28
• Industry Averages
• P/E: 24.7
• P/B: 3.15
• EV/EBITDA: 19.62
3September 15, 2016

4. Investment Thesis
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
Efficiency and Innovation leading to
diversified revenue base
Proliferation of the Internet of Things
(IoT)
Growing LTE Market, especially in Asian
and North American economies
4September 15, 2016

5. Applying Innovative Solutions to New
Markets
• Flexible and innovative products for solutions to growing
demand for powerful components
• Major shifts in way individuals view and consume media, music
streaming, video streaming.
• Perhaps best play on Netflix that is not Netflix
• Adoption of technologies to previously untapped markets
• Automotive
• Medical
• Clean Energy
• Wearables
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
5September 15, 2016

6. Appeared Dependency on Apple Inc.
• Estimated SWKS receives 30-40% of revenues from Apple
• True number remains opaque
• High Correlation with AAPL performance (.702)
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
6September 15, 2016

7. Appeared Dependency on Apple Inc.
• Skyworks increasingly reducing dependence on Apple
• Agnostic to brand, scalable on any cellular OEM platform
• Supports all top-tier manufacturers
• Non-cellular revenues surpassed 25% of total revenues in 2015
• Skyworks well-positioned to remain a major supplier for
Apple
• Stalwart of consumer technology, provides stability for Skyworks
• Recently hinted that Skyworks’ products may have a larger dollar
value of total components in upcoming iPhone 7
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
7September 15, 2016

8. September 15, 2016 8

9. IoT: Wireless Connectivity of people, places
and things
• Connecting everyday devices requires reliable, powerful
and innovative communication technology
• Skyworks’ highly innovative systems are scalable on virtually any
platform
• SWKS best positioned to innovate and capture this growing market
• Connected home, connected car, major customers include: NEST,
Honeywell, Bose, GM, FCAU
• Major Innovations to capitalize on IoT:
• Industry-leading RF switches with analog control ICs for IoT applications
such as connected home and smart lighting in homes
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
9September 15, 2016

10. IoT: Wireless Connectivity of people, places
and things
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
10September 15, 2016

11. LTE Market Poised to Expand Worldwide
• Growth of smart phone market worldwide, especially in
Asia
• Over 80% of the Chinese population are on 2G or 3G, expansion to
4G LTE will explode in next few years
• Growth of LTE will require innovations in data capacity, Skyworks is
leader in this technology
• Released world’s first solution optimized for LTE category M Applications
• Next Gen diversity receive modules, maximize LTE data throughput, help
mobile communications deliver increasing amounts of data
• Chinese consumer appears to still be on track to upgrade to 4G
• OEM share shifts do not matter to Skyworks, relationships with all
suppliers
• LTE dropping in price faster vs. 3G
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
11September 15, 2016

12. LTE Market Poised to Expand Worldwide
September 15, 2016 12

13. Valuation
• Price Target from Barclays Equity Research – $88
• Looks cheap vs. Major Comps
• Market severely discounting SWKS for appeared reliance on
Chinese economy, Apple products
• YoY revenue growth guidance from management: “high single digits
in next five years”
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
13September 15, 2016

14. Comparison with Industry Leaders
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
14September 15, 2016

15. DCF
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
15September 15, 2016

16. Revenue Break Down
September 15, 2016 16
Revenues (Million $) for Fiscal Year Ending Sep.
2016 2015 2014 2013 2012 2011 2010
1Q 926.8 805.5 505.2 453.7 393.7 335.1 245.1
2Q N/A 762.1 481 425.2 364.7 325.4 238.1
3Q N/A 810 587 436.1 389 356.1 275.4
4Q N/A 880.8 718.2 477 421.1 402.3 313.3
Year N/A 3,258 2,292 1,792 1,569 1,419 1,072

17. Risks – Skyworks Specific
• Relatively low R&D spending could impair Skyworks’
Competitive Edge vs. Peers
• Increased competition could lead to a failure to secure deals
from major customers
• E.g. Intel gets deal with Apple on iPhone 7
September 15, 2016 17
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions

18. Risks – Macro
• Lower than expected rate of phone replacement in developed
economies
• Consumers could be content with current generation smart phones
• Slowdown in emerging markets could sap demand for
consumer electronics and smart phones which utilize SWKS
components
• Worries centered on recent troubles in Chinese economy
• 20-25% of revenues from China
• Crowded Trade?
• 25 analysts following SWKS: 24 “BUY rating,” 1 “Hold rating,” 0 “Sell”
• Wall Street Darling
September 15, 2016 18
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions

19. Summary
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
19September 15, 2016
Efficiency and innovation leading to
diversified revenue base
Proliferation of the Internet of Things
Growing LTE market: especially in Asian
and North American economies

20. Questions?
Company
Overview
Investment
Thesis
Valuation Risks Summary Questions
20September 15, 2016

21. Appendix
21September 15, 2016