Skyworks: Downgrading Our Moat Rating to None from Narrow due to Increasing Competition

We are downgrading our moat rating for Skyworks Solutions to none from narrow, based on our review of the company's looming radio frequency chip share loss within Apple's upcoming iPhone 17 series, along with our pessimism around potentially lucrative Android-based smartphone opportunities that will help Skyworks recover from such share loss. We are no longer confident that Skyworks will generate excess returns on capital over the next decade. We view a strong recovery of RF content at Apple as possible, but it is no longer our base-case assumption. We maintain our $70 fair value estimate, which we established on Feb. 5 upon the news of the socket loss at Apple, and our various model updates associated with our moat downgrade are relatively immaterial. We view shares as fairly valued.