AAPL’s Ecosystem: 2 Winners and 2 Losers

by Adam Benjamin | October 3, 2013 9:39 am

Apple (AAPL[1]) gets most of the attention in the tech world, especially in the months surrounding a new iPhone release. But AAPL is far from the only company actually responsible for all the hubbub.

In fact, there’s a whole ecosystem of companies involved in the making of AAPL products … and naturally, those companies can rise or fall along with Apple products.

Apple stock is up about 4% since the release of the iPhone 5S and iPhone 5C. But AAPL still is struggling to sit comfortably above $500 after crashing down from all-time highs last September. And while the sales numbers for the new iPhones appeared outstanding, a closer look suggests more modest performance[2].

But what’s going on in the rest of the Apple ecosystem?

LG Display

LG Display (LPL[3]) is having a busy year. LGL has been working on new technology for flexible displays, which eventually got the company tangled in lawsuits with Samsung (SSNLF[4]). But, in a rare moment of corporate cooperation, the companies have dropped the lawsuits[5] so that they can work together toward a flexible display patent.

However, LG Display’s relationship with Apple could be rockier, given rumors that retina-display iPad Minis are suffering from manufacturing delays[6]. That’s bad news for a company that was already hit by iPhone 5C pricing concerns.

LPL is down 19% year-to-date.

Micron Technology

Micron Technology (MU[7]) wasn’t historically a supplier of Apple, but the company recently acquired a backdoor route into the company’s supply chain by acquiring Elpida[8], one of Apple’s biggest chip suppliers. The deal was brewing for about a year, and finally closed in July, tying Micron intimately to Apple’s products. Analysts are bullish on the company’s future, bumping the company’s price target to $25, up from $21.

MU currently trades at $17, which is 180% better than it was doing at the start of 2013, making it one of the S&P 500′s best stocks year-to-date[9].

Arm Holdings

Arm Holdings (ARMH[10]) might have been the biggest beneficiary of the iPhone 5S. The company designed the device’s new, 64-bit processor, which has been touted as one of the biggest advancements over the iPhone 5. If its 64-bit processors take off in other smartphones, it could mean monster royalties[11] for ARMH.

ARMH is up 28% YTD, and has soared 20% in the past month alone.

Intel

And then there’s Intel (INTC[12]). The former PC giant has struggled in 2013, failing to capture any significant market share with its mobile devices. The success of ARMH has weighed heavily on Intel, which recently announced the impending closure of one of its manufacturing plants. INTC has refocused its efforts on low-power chips for mobile devices and wearable tech with its new chip platform, Quark[13]. But it remains to be seen whether the Internet of Things will propel INTC stock into a comeback.

INTC stock is up about 10% YTD, lagging the broader market.

Bottom Line

Investors are looking at a mixed bag when it comes to AAPL’s suppliers. MU and ARMH have made for good picks, while INTC stalls and LPL continues its descent.

Events like the next iPad release — expected sometime this month — could affect these stocks, but for now, there’s a broad line separating the winners and losers.

Adam Benjamin is an Assistant Editor of InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  2. more modest performance: http://investorplace.com/2013/09/apples-iphone-launch-weekend-wasnt-what-it-seems/
  3. LPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=LPL
  4. SSNLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSNLF
  5. the companies have dropped the lawsuits: http://www.insidecounsel.com/2013/09/25/samsung-and-lg-agree-to-cooperate-on-display-paten
  6. suffering from manufacturing delays: http://www.reuters.com/article/2013/10/02/us-apple-mini-suppliers-idUSBRE99104H20131002
  7. MU: http://studio-5.financialcontent.com/investplace/quote?Symbol=MU
  8. acquiring Elpida: http://news.cnet.com/8301-1001_3-57596426-92/micron-completes-$2-billion-buy-of-chip-supplier-to-apple/
  9. S&P 500′s best stocks year-to-date: http://investorplace.com/2013/09/the-10-best-stocks-of-2013-so-far/
  10. ARMH: http://studio-5.financialcontent.com/investplace/quote?Symbol=ARMH
  11. monster royalties: http://www.bloomberg.com/news/2013-09-11/arm-holdings-gains-on-apple-iphone-royalty-boost-london-mover.html
  12. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  13. its new chip platform, Quark: http://blogs.marketwatch.com/thetell/2013/09/10/with-spotlight-on-apple-intel-takes-aim-at-wearable-tech-with-quark/

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