SWKS is one stock I really like but I cannot treat as a LTBH / buy and forget type investment. Whilst I completely agree with Chris on the current valuation front with his post (http://discussion.fool.com/swks-is-it-too-late-to-buy-31666303.a…), what I cannot get my head around is:
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Semiconductors are notorious for producing shooting stars that are designed in, selling like hot cakes, then designed out. Skyworks has been going since 1962 - if you look at the long term chart (view here and click on max: http://finance.yahoo.com/echarts?s=SWKS+Interactive#), this rise to 100 is a very recent success story accompanying some design wins in mobile - but Apple has a history of rotating its suppliers and Qualcomm has a history of substituting its own solutions.
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What they do sounds completely ordinary…“Skyworks Solutions, Inc., together with its subsidiaries, designs, develops, manufactures, and markets analog and mixed signal semiconductors worldwide.” Sure the end market of any connected device (across amplifiers, attenuators, battery chargers, circulators, DC/DC converters, demodulators, detectors, diodes, directional couplers, filters, front-end modules, hybrids, infrastructure radio frequency subsystems, isolators, LED drivers, mixers, modulators, optocouplers, optoisolators, phase shifters, phase locked loops/synthesizers/VCOs, power dividers/combiners, power management devices, receivers, switches, technical ceramics, and voltage regulators) sounds sexy but what they do is fairly standard stuff
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There are honestly not that many chip suppliers that are worth $20bn+. At some point customers or competitors are going to squeeze the value out of the market. Apple and other smart phone companies cannot keep handing over $5 per handset just to Skyworks alone - it doesn’t make sense.
I will be watching very carefully for margin deterioration or customer/flagship product design out losses.
Ant