Skyworks Buys Qorvo to Create $22 Billion RF, Analog, and Mixed-Signal Chip Giant

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Skyworks Solutions has agreed to merge with rival Qorvo in a cash-and-stock deal that will create a $22 billion giant in high-performance radio frequency (RF), analog, power, and other mixed-signal semiconductors.

The move unites longtime rivals that supply the critical RF components used in anything and everything in the world of wireless connectivity from smartphones and IoT devices to aerospace, automotive, and defense systems. By combining engineering talent and manufacturing scale, the companies aim to expand their reach, diversify their customer base, and enhance their ability to compete with larger rivals in the semiconductor industry.

Skyworks CEO Phil Brace said the deal strengthens the company's position in its core mobile markets. And Qorvo CEO Bob Bruggeworth said the move will help accelerate product development and broaden the combined company's reach into fast-growing markets at the edge of connectivity, such as the IoT. Brace will serve as CEO of the company, while Bruggeworth will join the board of directors.

Skyworks said the combined company would have about $7.7 billion in annual revenue and adjusted earnings of $2.1 billion, putting it in a better position to compete against larger players. The new company will be supported by "a stronger, more balanced revenue base that enables more predictable performance" during the up and down cycles experienced by the semiconductor market.

According to the companies, the deal will bring together "world-class" engineering talent, including approximately 8,000 engineers and technical experts as well as more than 12,000 patents. This will strengthen its "innovation pipeline" by enabling faster development of advanced, system-level solutions and unlocking new design-win opportunities to meet growing customer demand, the companies said.

Skyworks, which supplies RF filters and the other building blocks of RF front ends (RFFEs) to Apple and other smartphone giants, said the combination would create a $5.1 billion mobile business. The deal brings together complementary RF technologies, giving it the ability to supply more tightly integrated mobile solutions to address rising RF complexity. The companies said the broader product portfolio will also help diversify their technology base and deepen customer integration.

The RFFE is one of the most important components when it comes to wireless connectivity, bridging the gap between the modem and the antenna. They typically consist of power amplifiers (PAs), low-noise amplifiers (LNAs), RF switches, filters, couplers, antenna tuners, and a number of other RF components used to improve performance over various network technologies such as 4G LTE, 5G, and Wi-Fi. They work to maximize the speed, range, and robustness of the connection while minimizing power.

The companies also expect the deal to improve manufacturing utilization and bolster domestic production capacity, which will be supported by a robust network of supply chain partners to meet the needs of both high-volume and highly specialized customers. Skyworks and Qorvo said they also anticipate annual cost savings totaling $500 million or more within 24 to 36 months post-close when the companies are fully integrated.

“This combination marks an important milestone for our industry and for Skyworks,” said Skyworks' Brace. “Combining Skyworks’ and Qorvo’s complementary portfolios and world-class engineering teams will strengthen our ability to meet growing customer demand across mobile and diversified broad markets."

He added, "With enhanced scale, a more diversified customer base, and operational synergies, we can bring even greater innovation to our customers and sustainable value to our shareholders.”

“Qorvo and Skyworks share a culture of innovation and a commitment to solving our customers’ most complex challenges,” said Qorvo's Bruggeworth. “Together with Skyworks, we can accelerate innovation and deliver broader and more comprehensive solutions across numerous growth areas.

"We are excited to leverage the combined strengths of our teams and product and technology portfolios to build on our capabilities in mobile and significantly expand our presence in defense and aerospace, edge IoT, AI data center, automotive, and other industries powered by secular growth trends.”