2026 Active-Passive Investor Summit – Skyworks Solutions, Inc.
Starboard Value is a New York activist hedge fund that Jeff Smith and partners spun out as an independent firm in 2011 (the strategy dates to 2002 at Ramius). It targets undervalued U.S. small- and mid-caps, pushing board overhauls and operational fixes — famously its ~300-page Darden/Olive Garden deck.
In plain words
This report says Skyworks (SWKS) is undervalued after buying Qorvo, because the market misses its big profit potential. The author thinks its P/E is only about 7x based on long-term goals, much lower than peers. Three key holdings: Skyworks itself is seen as cheap with margins rising from 23% to 30-35%; Qorvo's defense and aerospace business is growing fast; mobile AI upgrades and data center demand are growth drivers.
At a Glance
The author holds an extremely bullish stance on Skyworks (SWKS), believing the market significantly underestimates its earnings growth potential following the acquisition of Qorvo, with the current valuation at only about 7 times the long-term target P/E.
- The author argues that after Skyworks acquires Qorvo, operating margins could improve from 23% to 30-35%, corresponding to operating profits of $2.5-3.0 billion.
- Consensus EPS estimates are well below the updated analyst forecasts, which project EPS of approximately $11 for FY28E, about 30% higher than consensus.
- Based on the midpoint of long-term financial targets, Skyworks trades at a P/E of only about 7 times, far below the peer median of 25.5 times and the mobile peer median of 14.6 times.
- The AI-driven upgrade cycle in mobile and increased RF content serve as growth catalysts, while defense/aerospace and data centers in the broad markets business are two key high-growth engines.
At a Glance
Significant Margin Expansion Potential Post-Merger, Targeting 30-35% Operating Margin
Following the Qorvo acquisition, Skyworks' pro forma operating margin stands at approximately 23%. Through announced cost synergies and incremental revenue growth, the report argues the company can achieve a 30-35% operating margin, corresponding to $2.5-3.0 billion in operating profit. The author cites CEO Philip G. Brace's statement on September 10, 2026, as evidence: "So 2-3 years from now, you'd expect us to see kind of certainly getting to our business model target, 50% to 55% gross margin, 30% to 35% operating margin, 35% to 40% EBITDA margins, very attractive capital structure, large and growing markets..."
The evolution of SWKS' operating profit is shown in the table below:
| Phase | Operating Margin | Operating Profit |
|---|---|---|
| SWKS Standalone FY26E | 21% | $0.8 billion |
| Pro Forma Combined FY26E (incl. Qorvo) | 23% | $1.7 billion |
| Pro Forma + Announced Synergies ($0.5 billion) | 29% | $2.2 billion |
| Long-Term Financial Target (incl. Incremental Revenue) | 30-35% | $2.5-3.0 billion |
The Market Underestimates Earnings Growth Potential; Significant Gap in EPS Estimates
From the merger announcement to its completion, Skyworks' stock underperformed the semiconductor index by over 30%, and only 5 out of 22 analysts have updated their forecasts, leading to overly low consensus expectations. The author believes that due to the long period between signing and closing and a lack of investor interest in event-driven opportunities, the investment community and analysts have not closely tracked Skyworks' story.
Analysts who have updated their models forecast FY28E EPS of approximately $11, roughly 30% higher than consensus expectations. Based on the midpoint of the long-term financial targets (5% revenue CAGR, 30-35% operating margin, $2 billion in share repurchases by January 31, 2029), EPS is even higher. The specific comparison is as follows:
| Metric | FY26E | FY27E | FY28E | FY28E/FY29E (Long-Term Target Midpoint) |
|---|---|---|---|---|
| Consensus EPS | $5.04 | $5.15 | $6.18 | — |
| Updated Analyst EPS | — | $6.26 | $7.88 | ~$11 |
Valued at Only ~7x P/E Based on Long-Term Targets, Extremely Cheap
The author argues that investors largely rely on outdated sell-side EPS estimates, assigning very low value to the significant margin expansion opportunity. Based on long-term margin targets, SWKS trades at a P/E of only approximately 7x. For comparison, the P/E based on FY27E consensus is 15.5x, based on updated analysts' FY27E is 12.7x, based on updated analysts' FY28E is 12.9x, while the P/E based on the long-term financial target midpoint for FY28E is only about 7x. The author notes that the updated FY27E expectations capture only a small portion of the announced cost synergies, and the updated FY28E expectations do not even include nearly half of the announced synergies.
Mobile: AI-Driven Upgrade Cycle and Increased RF Content as Growth Catalysts
Approximately 62% of revenue comes from the mobile end market ($7.5 billion), and post-merger, Skyworks has a more comprehensive mobile product portfolio. The mobile product lines of Skyworks and Qorvo are highly complementary, collectively covering all major RF front-end categories, making the combined company a more critical supplier for customers. The author believes that expectations for smartphone sales declines in 2026 and 2027 due to rising memory prices ignore the AI-driven upgrade cycle. Additionally, AI-driven consumer products (e.g., smart glasses, Apple AI Pin/Pendant, humanoid robots) require RF content, expanding Skyworks' addressable market. The author states that investors are getting a free AI growth call option with Skyworks.
Regarding RF content, the author believes an inflection point in mobile RF content is imminent. Smartphones are becoming the primary AI devices, and AI workloads demand higher uplink performance. Management points out that RF complexity is increasing for the first time in years, and 6G will continue this trend. From 3G to 6G, the RF front-end content per smartphone has grown from approximately $15 to over $50.
Broad Markets Business: Defense & Aerospace and Data Centers as Two High-Growth Engines
Approximately 38% of revenue comes from the broad markets business, covering defense & aerospace, AI data centers, edge IoT, automotive & industrial, serving thousands of customers with long product lifecycles. The author is particularly bullish on the defense & aerospace and data center businesses, believing they are experiencing substantial growth that is not fully reflected in growth expectations.
- Defense & Aerospace: Qorvo's defense & aerospace business, benefiting from strong industry tailwinds, is expected to sustain double-digit growth, with revenue growing from approximately $0.4 billion in FY2025 to an estimated $0.5 billion in FY2027E, with a long-term target of approximately $1.0 billion.
- Data Centers: Skyworks' data center business has secured design wins with several leading customers, growing at an annual rate of over 50%. Management indicates that data center demand exceeds supply.
The author concludes that the merger positions Skyworks favorably in two of the fastest-growing end markets in the semiconductor industry.
Skyworks at 7x P/E is Severely Undervalued
Starboard believes Skyworks' current forward P/E of approximately 7x is far below peers, and the company possesses high-quality characteristics such as high margins, strong cash flow, and a favorable capital structure. The article quotes Skyworks CEO Philip G. Brace from his September 10, 2026, remarks: "And you end up with kind of a mid-single-digit kind of grower, 50-55% gross margin, 30-35% operating margin and 35-40% EBITDA margin, very favorable capital structure, throws off a lot of cash. And I think we're going to be in a really good spot. It should result in really good EPS growth over time."
Skyworks' valuation shows a massive gap compared to peers. The following is a comparison of NTM P/E ratios (data as of October 18, 2026):
| Company | NTM P/E |
|---|---|
| MPWR | 34.5x |
| MTSI | 31.2x |
| TXN | 27.3x |
| ADI | 23.6x |
| MCHP | 17.7x |
| ON | 16.8x |
| QCOM | 16.7x |
| CRUS | 15.5x |
| Peer Median | 25.5x |
| Mobile Peer Median | 14.6x |
| SWKS (FY27E Consensus) | 12.7x |
| SWKS (FY27E Based on Updated Analysts) | 12.5x |
| SWKS (FY28E Based on Updated Analysts) | 10.1x |
| SWKS (Long-Term Financial Target Midpoint) | ~7x |
Starboard points out that Skyworks' pro forma P/E after achieving margin improvement is approximately 7x, far below the peer median of 25.5x and the mobile peer median of 14.6x. Its long-term financial targets assume: 5% revenue CAGR, 30-35% operating margin (by FY28E/FY29E), and $2 billion in share repurchases by January 31, 2029.
Position Moves
| Ticker | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| Skyworks (SWKS) | Hold & Watch | Extremely bullish, believes it is severely undervalued, with a long-term target P/E of only 7x | Long-term target operating margin 30-35%, operating profit $2.5-3.0 billion; FY28E EPS ~$11; NTM P/E ~7x (midpoint of long-term target) |
| Qorvo | Not explicitly stated | Discussed as an acquisition target, with business highly complementary to Skyworks | Pro forma combined operating margin 23%; defense & aerospace revenue growing from ~$400 million in FY2025 to ~$500 million in FY2027E |