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Skyworks and TriQuint: 2 Chip Stocks That Could Deliver High Growth

May 27, 2014 | About:
Rustic Nomad

Rustic Nomad

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As the chip-making industry is booming, chip makers such as Skyworks Solutions (SWKS) and TriQuint Semiconductor (TQNT) have seen tailwinds in their business. Both companies provide micro chips and radio frequency components to giants such as Apple and Samsung. Having seen tremendous growth in the past, let us have a look whether these companies are good for the future.

A Look at TriQuint

TriQuint has been a high flyer as the company has gained more than 63%. TriQuint’s robust outlook and strong strategic moves led the company to deliver handsome profits and earnings to shareholders.

Moreover, weak results in one quarter couldn’t harm the company’s robust business. TriQuint maintained its growth momentum and bounced back. With Apple being one of its customers, the company gained large portion of revenue from its contractor Foxconn. TriQuint is well-placed to benefit from the current slate of iDevices, as well as the refreshed versions later this year.

TriQuint is seeing bright opportunities from Apple. According to CNET, Apple is on the front foot for making new innovations and is bringing in new products with exciting features. The company’s CEO has stated that some big plans are in store for Apple in 2014. Besides usual iOS updates and new devices, Apple is increasing the screen size on new iPhones and is also introducing a bigger iPad with a 12-inch screen. In addition to this, the deal with China Mobile has opened a bigger door for Apple in China.

On the other hand, Samsung’s flagship should prove to be a growth driver for TriQuint. Moreover, the company had a strong order backlog at the end of the third quarter. Its book-to-bill ratio was an impressive 1.11, and this should translate into better revenue numbers going forward.

A Look at Skyworks

Moving on to Skyworks, the innovation of Apple will surely benefit Skyworks in the same way as it is expected to benefit TriQuint. Skyworks is also a major supplier to Apple. However, some analysts are expecting higher content at Apple for Skyworks. Looking at the existing situation, both Skyworks and TriQuint are expected to take market share away from Peregrine Semiconductor, which could lead to higher revenue going forward.

But Skyworks has two more big catalysts in store. First, the company is making good progress in the Chinese smartphone market, where 80% cell phone users are currently using 2G phones. Skyworks sees huge opportunity here as customers upgrade to smartphones. It has already entered into partnerships with Chinese chipmakers Spreadtrum and MediaTek.

Going forward, Skyworks has bright opportunities in Industrial Internet and the Internet of Things. This market is moving ahead with a good pace and the company is expecting 50 billion connected devices to be out by 2020. This is a bright opportunity for Skyworks. In addition, the chip maker is also trying its hand in the healthcare industry. Skyworks is already in partnership with GE Medical, Boston Scientific, and Medtronic and is especially excited about the GE opportunity.

According to the latest update, GE is planning to integrate machine-to-machine connectivity across its complete industrial portfolio. With this, there are bright opportunities for Skyworks and it can expect stronger demand for its chips in future.

Conclusion

If we compare both companies, TriQuint is robust with its plans and management has promised strong initiatives. Skyworks is also making moves to diversify its business. Looking forward, both these companies seem to have bright prospects and strong clients. As such, it won’t be surprising to see both of them beat the market once again in 2014 and beyond.


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