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Cramer: Is Skyworks Solutions depending on China?

Semiconductor stocks have taken a beating in the past few months, courtesy over worries of a slowdown in China cutting into the demand for technological gadgets. Jim Cramer decided to circle back to the group to see if it is safe to invest in high quality semiconductor stocks.

Skyworks Solutions is a maker of high-performance radio frequency and analog chips for smartphones, tablets, cars, GPS, broadband and wireless networking. It also contributes to various industrial, medical and military applications.

It has been speculated that Skyworks gets as much as a third of its total sales from Apple, though Apple discourages any discussion of its relationship with suppliers, so that figure is unconfirmed. Still, as Apple has been slammed in recent months over weakening iPhone demand in China, Skyworks has been dragged down along with it.

Now that Skyworks is down more than 22 percent from its June highs, has it finally become safe to buy again? To find out, Cramer spoke with Skyworks Solutions Chairman and CEO David Aldrich.





David Aldrich, CEO of Skyworks Solutions
Scott Mlyn | CNBC
David Aldrich, CEO of Skyworks Solutions

Cramer speculated that many investors were scared away from the stock on Aug. 6 when Goldman Sachs reported that Skyworks Solutions had an 83 percent sales exposure to China.

Aldrich confirmed that the figure was false, stating, "I can only speculate that maybe they are picking up all contract manufacturers, because we have products that are built in China but they are not consumed within China."

The CEO stated that Skyworks derives approximately 20 to 25 percent of its revenue from China. Aldrich also stated that in 2014, there were under 100 million LTE phones shipped to China. This year, that rate has increased dramatically to a quarter of a billion.

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"So, we have high dollar content, few competitors, higher margins in a segment of the market that is growing quite strong," Aldrich said.

The one area that Skyworks has seen a dramatic shift in has been its original equipment manufacturer (OEM) shares, meaning, its customers. However, Aldrich said that what makes Skyworks unique is that it is quite agnostic from a brand standpoint.

"So, one is up, one is down, we are typically okay and that has been the history of our company. We haven't been whipsawed as much by changes in customer or brand loyalty within the segment," he said.

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