Skyworks (SWKS US): Leading RF semiconductor vendor Skyworks reported solid Q1'20 results that beat expectations. The strong results were mainly powered by the strength in its mobile segment, with revenue up 18% QoQ given the iPhone launch and initial 5G shipments of Sky5 to Chinese handset vendors (Oppo, Vivo, Xiaomi). The management again emphasized the larger 5G opportunity, as devices per person to grow from 8 to 14 by 2020. However, the infrastructure business was slow due to the sales ban on Huawei. The management expects the infrastructure business to pick up in the second half of 2020.

On Jan 23rd, Broadcom filed an 8K that stated the company will supply $15 billion of wireless components to Apple. As Broadcom is currently looking to sell its wireless chip division, there are rumors that Qorvo and Skyworks are weighing the bid. During the earnings call, the management didn’t rule out a possible deal: “At the same time we have to look at M&A opportunities and I'm pleased to say that we have the powder and the cash flow to do deals when deals are necessary.”

PTC Inc. (PTC US): PTC is a unique software company helping industrial companies to pursue their digital transformation ambitions, particularly through its growth businesses including Industrial IoT and Augment Reality solutions. It reported strong Q1'20 earnings on Jan 22nd and guided up for the full year. When asked about how 5G might accelerate the adoption of IoT, especially in the industrial factory automation market, therefore, PTC's IIoT & AR businesses, the management said,

"Well, I definitely think it's important for our IoT customers. It's too early to know if it would cause our business to grow faster or not. But certainly, in factories, people want to adopt 5G to have a high-speed low latency wireless communications for their machines and their Augmented Reality devices and so forth. So it's definitely important. And I can tell you we are engaged in discussions with several different 5G partners. I think one of them might end up being a big sponsor at LiveWorx. And I see it at this point as an ecosystem play, which is I want to make sure that 5G companies help promote our IoT technology and that our IoT technology can create opportunities for 5G companies and so forth. I think it's too early to say it's an accelerator but it's definitely important."

Teradyne Inc. (TER US): TER sits in front of two major secular trends, 5G and robotics through its Testing business (both semi and wireless testing for 5G) and Industrial Automation business (collaborative robots), respectively. TER reported Q4'19 earnings showing strong momentum, especially in the Testing business. Three bright spots: a) 5G infrastructure build-out in China; b) significant smartphone complexity growth (not 5G related; more for other features such as imagine sensors); c) share gain in memory semi testing (breaking into DRAM tester). TER can see the underlying dynamics of 5G development a lot earlier given where it is in the value chain. The management did give their take during the earnings call. 

"5G build-out contributed $200mm to the $3.3 billion SoC Testing TAM in 2019 and TER captured 70% of it; mostly concentrated in China."

"Balancing the strength, we are seeing the expected pause in the 5G infrastructure test buying that powered our 2019 sales. At a high level, we’re seeing the 5G demand evolve from infrastructure to smartphones, as we outlined in past calls. The global 5G infrastructure build-out is still in the early innings, and we expect test demand will cycle as various geographies build out their networks" 

"5G smartphone-related test demand will begin in 2020, but it will be somewhat modest as it’s mostly low band/Sub-6 rolling out. mmWave are still to come over the mid-term. Additionally, we do not expect to see any significant recovery in the automotive or analog markets in 2020" 

"So I think that from a test intensity point of view, handsets will matter more. So to roll out China sub-6G or low band to put in the infrastructure to do that, a tremendous amount of capacity was built out in one year to make that happen. Millimeter-wave is going to be spread over many years. I don't think that it's going -- it'll be marginally more tests intensive than at the base station level than sub-6G. But it's not going to have the same sort of $150 million, $200 million bump in TAM like we saw last year. On the other hand, the handset side of this is where the real money will be, for both LitePoint and SemiTest. And we still think that’s probably 2021 or 2022. It may -- we're a little more optimistic that it's coming sooner on millimeter wave. But if we go back to that $400 million bump to the SOC market, if you're thinking about 2022, it's probably $300 million plus of that is going to be handset related."