Thanks to Saul’s link to the Skyworks presentation, Monkey, too, now confirms that he feels SWKS is a tremendous investing opportunity and has wager lots of bananas accordingly. There is a lot of conviction expressed by the CEO with lots of fancy charts and figures that support his enthusiastic claims.
Here’s the link from up-board which all investors in the company oughtta watch:
But even though lots of things are spelled out, some abstractions remain, which Monkey hopes a Big Brain could help explain.
1)Skyworks doesn’t sell components, it sells complex design solutions with those components, right? Often working on the design years ahead of the product release. So Skyworks is not exactly in the chip/circuit/conductor/gadgets business, which is good, because those get commodified.
Margins are going up. Therefore competition is not making inroads.
But why? If this is such a good business, with such a huge market opportunity, why is Skyworks the only company that knows how to put components together into a single box? Are there not lots of engineers running around with this kind of know-how?
The rules of capitalism make sure that competition arises. If it’s not about the pieces of technology, but about the design infrastructure of those pieces, what’s preventing another company from studying how skyworks puts things together and then setting up their own shop, and little by little charging less and stealing business?
These are all simplifications of what’s no doubt a more complex problem, but the basic question is the same––why are there alligators in Skyworks’s moat? Is it a question of first-mover advantage? Of scale? Of some kind of black magic?
Thanks in Advance for your Insights,