Pro Analysis

Goldman downgrades Apple supplier Skyworks on competitive threat from Broadcom

Liam Griffin, CEO, Skyworks Solutions
Scott Mlyn | CNBC
Liam Griffin, CEO, Skyworks Solutions

Goldman Sachs lowered its rating for Skyworks Solutions to neutral from buy, saying the wireless chip company's sales will lag behind Broadcom going forward due to the latter's better technology.

"We downgrade SWKS ... While we remain constructive on the mobile RF [radio frequency] segment, we believe AVGO [Broadcom], with its differentiated FBAR filter technology, is likely to capture the majority of the delta (as was the case in CY2016), leaving limited incremental content growth ... for others over the next several years," analyst Toshiya Hari wrote in a note to clients Thursday. "While near-term smartphone demand appears stable (Chinese OEMs better, Apple/Samsung marginally weaker), we are cutting CY17/18 revenue [estimates] as we now assume lower content growth (~10%) relative to previous expectations (~14%)" for Skyworks."

Radio frequency semiconductors enable the ability for smartphones to communicate with wireless networks.