Skyworks' fiscal Q3 revenue fell 3.1% to $934.8M on lost share at a major customer, while GAAP EPS dropped 69% to $0.22 on Qorvo merger costs, restructuring and a higher tax rate; Q4 guidance calls for $1.01–1.06B as its largest customer's launches ramp.
Revenue
$935M
-3.1% YoY
Net income
$34M
-67.7% YoY
Diluted EPS
$0.22
-68.6% YoY
Operating margin
5.2%
Overview
Skyworks' fiscal third quarter (the three months ended July 3, 2026) brought a small sales decline and a much larger profit decline. Revenue fell 3.1% to $934.8 million, but GAAP net income dropped 68% to $33.9 million ($0.22 per diluted share, versus $0.70 a year earlier). Most of the gap between those two numbers comes from costs that have little to do with selling chips this quarter: professional fees for the pending Qorvo merger, facility-closure charges, and a much higher tax rate.
The 10-Q gives one reason for the revenue decline: it was "driven primarily by a decrease in market share at a significant customer, partially offset by an increase in demand for our automotive and data center products." The filing does not name that customer. Skyworks' annual reports have historically identified Apple as its largest customer, and the earnings release ties next quarter's rebound to "new product launches at our largest customer."
Key figures
Metric
Q3 FY2026
Q3 FY2025
YoY Change
Revenue
$934.8M
$965.0M
-3.1%
Gross margin (GAAP)
40.1%
41.6%
-1.5 pts
Operating income (GAAP)
$48.5M
$110.6M
-56.1%
Operating margin (GAAP)
5.2%
11.5%
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Operating margin is the share of revenue left after the costs of running the business, before interest and tax. Non-GAAP figures are the company's own adjusted numbers. They leave out stock-based pay, amortization of past acquisitions, merger costs and restructuring charges. The company reports no formal business segments ("not segregated for reporting purposes"). It also discloses no dollar split between Mobile and Broad Markets for the quarter, so the customer-location line above is the closest disclosed stand-in for customer concentration.
Where revenue came from
By customer location: Skyworks assigns revenue to the country where the phone or device maker (the OEM) has its headquarters. US-headquartered customers accounted for $704.9 million, or about three-quarters of revenue, down from $724.7 million. Revenue from South Korea fell to $35.9 million from $45.5 million (-21%), while China rose slightly to $66.6 million from $64.6 million.
By sales channel: $775.2 million went through distributors (down from $816.8 million) and $159.6 million went directly to customers (up from $148.2 million).
Mobile vs. Broad Markets: The release does not give dollar figures. The CEO said "Mobile performed well on healthy demand, and Broad Markets delivered another quarter of year-over-year growth, led by double-digit gains in automotive and data center." Broad Markets covers everything that is not a phone: cars, Wi-Fi, data centers, industrial equipment.
Over the first nine months of fiscal 2026, revenue was $2,913.9 million (-2.4%). The 10-Q says the decline was also partly offset by stronger demand for Wi-Fi products.
Why profit fell much faster than sales
Weaker product mix. Gross margin, the share of revenue left after the cost of making the chips, fell to 40.1% from 41.6%. The 10-Q attributes this to "unfavorable product mix, partially offset by higher unit volumes." Skyworks sold more units, but less of what it sold carried a high margin.
Higher R&D. Research and development rose 4.2% to $207.8 million (22.2% of revenue, up from 20.7%). The filing attributes the increase to "headcount-related expenses as a result of our increased investment in developing new technologies and products."
Merger costs. Selling, general and administrative expense rose 10.5% to $98.7 million, "primarily related to increases in professional services costs related to the ongoing Qorvo transaction." The 10-Q puts Qorvo transaction costs at $14.2 million this quarter and $67.6 million for the nine months.
Restructuring. Restructuring, impairment and other charges jumped to $19.8 million from $1.5 million, "primarily due to costs associated with facility consolidation and closure."
Tax. The tax provision more than doubled to $14.9 million on lower pre-tax income ($48.8 million). That is an effective rate of about 31%, against about 6% a year earlier. The 10-Q attributes this to "transaction costs related to the pending transaction with Qorvo and uncertain tax positions." Some merger fees cannot be deducted for tax.
The non-GAAP figures strip these items out, and they still fell: non-GAAP EPS dropped 19% to $1.08 and non-GAAP operating margin fell 3.9 points. So the core business did weaken. The one-off costs account for the gap between that decline and the 68% fall in GAAP earnings.
Cash, inventory and capital returns
Cash generation dropped sharply. Operating cash flow was $70.4 million, versus $314.1 million a year earlier. After $87.1 million of capital spending, free cash flow (cash left after investment in plant and equipment) was negative $16.7 million. The nine-month operating cash decline of $584.6 million was, per the 10-Q, "due primarily to inventory and lower net income."
Inventory build. Inventory reached $1,015.5 million, up from $754.7 million at fiscal year-end. Finished goods nearly doubled, from $169.3 million to $332.1 million. Some of this is likely stock built ahead of the seasonal September-quarter ramp. If shipments fall short of guidance, it becomes a write-down risk.
Debt and cash. Skyworks repaid $500 million of 1.80% notes due 2026 during the quarter. Cash plus marketable securities fell to $813.8 million, down $574.6 million since October 3, 2025.
Dividend ended. On July 28, 2026, the board decided not to declare quarterly dividends going forward. It replaced the existing buyback with a new $2 billion stock repurchase program as part of a capital allocation framework for the combined company.
The Qorvo merger
Skyworks agreed on October 27, 2025 to combine with Qorvo, another maker of radio-frequency (RF) chips. Qorvo shareholders receive 0.960 Skyworks shares plus $32.50 in cash per share. After closing, Skyworks holders would own about 63% of the combined company. Both companies' shareholders approved the deal on February 11, 2026. The US Federal Trade Commission issued a "Second Request" (an in-depth antitrust review) on February 5, 2026. The parties have certified substantial compliance and say they are "increasingly hopeful" the deal closes within the calendar year. If the deal fails on antitrust or regulatory grounds, Skyworks owes Qorvo a $100 million termination fee. Goldman Sachs has committed up to $1.5 billion in bridge loans, and the release says Skyworks expects to raise about $2 billion of acquisition debt.
Takeaway: The 68% fall in GAAP EPS overstates the damage. Much of it comes from merger fees, facility closures and a merger-inflated tax rate. The underlying problem is real but narrower: lost share at one very large customer, a weaker product mix, and non-GAAP EPS down 19%. The new cost is on the balance sheet. The company burned cash this quarter while inventory rose about $260 million, and it has ended its dividend just as it takes on acquisition debt.
Outlook
Management's guidance for fiscal Q4 (the September quarter): revenue of $1,010–1,060 million, which is about 11% above Q3 at the midpoint, and non-GAAP diluted EPS of $1.27 at the midpoint. The guidance includes about $5 million ($0.03 per share) of added interest expense from Qorvo-related financing. Management expects "Mobile to grow sequentially in the high-teens range, supported by the seasonal ramp of new product launches at our largest customer." It expects Broad Markets to grow about 5% year over year to about 39% of sales, which puts phone-related Mobile revenue at roughly 61%.
Our read: The September quarter is always Skyworks' seasonal high point, so a sequential rebound on its largest customer's product launches is expected and says little about the share-loss problem the 10-Q names. The things to watch:
Whether Mobile revenue in the new phone cycle holds up against the "decrease in market share at a significant customer" cited this quarter.
Whether the $1.0 billion inventory balance turns back into cash in Q4. If it does not, the negative free cash flow was more than a timing effect.
Whether Broad Markets keeps growing. It is guided at only about 5% growth, while automotive and data center grew at double-digit rates.
Near-term GAAP results will keep carrying merger costs, and the balance sheet will change substantially if the Qorvo deal closes. Comparisons with prior-year quarters will get harder to read from here.
Source: Skyworks Form 10-Q for the quarter ended July 3, 2026 (non-GAAP figures, free cash flow and guidance from the company's July 28, 2026 earnings release, Exhibit 99.1).