Apple Shifts iPhone 17 Orders, Skyworks Stock Drops 25%

On February 5, following the U.S. stock market close, Skyworks, a leading provider of RF (radio frequency) components, released its financial results for Q1 of FY2025, ending December 27. While the company reported slightly better-than-expected overall performance and provided guidance in line with expectations for Q2, a key challenge looms for Skyworks. The company expects a significant decline in revenue from Apple, as Apple shifts part of its RF component orders for the upcoming iPhone 17 series to other suppliers. As a result, Skyworks anticipates a 20-25% reduction in revenue from Apple, causing its stock price to plummet by 24.67% on February 6.

Skyworks posted Q1 FY2025 revenue of $1.07 billion, matching analysts' expectations. Adjusted earnings per share (EPS) reached $1.60, surpassing the anticipated $1.57.

For Q2, the company forecasts revenue between $935 million and $965 million, which is consistent with analysts' projections.

However, during the earnings call, Skyworks CFO Kris Sennesael revealed that Apple would now be sourcing RF components for the iPhone 17 from two suppliers instead of relying solely on Skyworks. This shift is expected to decrease Apple's demand for Skyworks' RF components by 20-25%, meaning the company will no longer hold exclusive control over iPhone RF orders. This revelation contributed to the sharp 24.67% drop in Skyworks' stock price on February 6.

According to Skyworks, Apple accounted for 72% of the company's $1 billion in revenue from the October-December period. Additionally, 85% of that Apple-related revenue came from iPhone products.

While Skyworks did not name the competitor securing part of the iPhone 17 orders, analysts from Stifel, Raymond James, and TD Cowen speculate that Broadcom may be the primary competitor. Stifel's analyst Ruben Roy noted that Qualcomm had already secured a portion of Skyworks' Apple business last year.

TD Cowen analyst Krish Sankar pointed out that Apple's new approach could lead to a $600 million revenue impact for Skyworks in FY2025. Given that Skyworks' total expected revenue for 2024 is $4.2 billion, this loss represents a significant challenge for the company.

In a call with investors on Wednesday afternoon, CFO Kris Sennesael acknowledged that "the competitive landscape has become increasingly difficult in recent years," noting that the shift in Apple's purchasing strategy is tied to the upcoming mobile cycle. He further stated that revenue for Q4 FY2025 and the entire FY2026 is expected to decline as a result.

However, Sennesael expressed optimism about opportunities with other clients, which could help offset the loss of business from Apple in 2026. The company hopes to capitalize on the launch of the iPhone 18 in 2027 to support a recovery.