Hybrid employee organizational structures, cloud services and Internet of Things (IoT) devices used by various businesses reveal the growth potential of 5G. To expand the country’s 5G base, President Biden has proposed $50 billion funding for the U.S. semiconductor industry as part of his $2 trillion infrastructure spending proposal. This follows the President’s executive order, passed two months ago, to review the nation’s semiconductor shortage.
Various companies have begun to manufacture 5G-supported devices to capitalize on this industry tailwind, leading to a shortage of semiconductor chips worldwide. In addition, U.S.-China trade tensions are forcing Taiwan Semiconductor Manufacturing Company (TSM), a Taiwanese multinational semiconductor manufacturing and design company, to build factories in both countries. Consequently, the global 5G services market size is expected to grow at a CAGR of 46.2% over the next seven years to hit $664.75 billion by 2028.
In light of these developments, Skyworks Solutions, Inc. (SWKS – Get Rating), Qorvo, Inc. (QRVO – Get Rating), and Cirrus Logic, Inc. (CRUS – Get Rating) are expected to generate significant revenues in this quarter. Thus, we think it could be wise to invest in these stocks now.
Founded in 1962, SWKS designs develops, manufactures and markets semiconductor products. The company provides products for use in the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, and wearable markets. It sells its products through a direct sales force, electronic component distributors, and independent sales representatives.
SWKS is scheduled to repurchase up to $2 billion of its common stock in increments prior to January 26, 2023. On January 14, the company collaborated with Xilinx, Inc. (XLNX) to showcase the spectral and power efficiency achievable using its SKY66318-21 power amplifier in 5G infrastructure applications. Also in January, SWKS announced that its high-performance Wi-Fi 6E front-end modules were featured on the world’s first ultra-fast Wi-Fi 6E gaming router from ASUS.
For its fiscal year 2021 first quarter (ended January 1, 2021), SWKS’ net revenue increased 68.5% year-over-year to $1.51 billion. Its non-GAAP gross profit has increased 71.8% year-over-year to $771 million. The company’s non-GAAP operating income came in at $622 million for the quarter, up 97.2% year-over-year. Its non-GAAP net income of $560.50 million represents a 94.2% rise year-over-year. Also, SWKS’ non-GAAP EPS has increased 100% year-over-year to $3.36.
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