Remember “1984”? No, not the year or the book. I’m thinking of director Ridley Scott’s television commercial that introduced the Apple (NASDAQ:AAPL) Macintosh personal computer during Super Bowl XVIII.
Hard to believe that was XXXVIII years ago. It defined the Apple event.
Nowadays, the annual slate of Apple events usually include a spring event in March, the Worldwide Developers Conference in June, and an October event if there are tablets. These events, and new devices, will help stoke interest and drive growth in Apple supplier stocks.
There’s a lot of buzz about iMac Pro coming in March or April. Many people are excited about the new iPhone SE and think that it’ll be released soon. It seems to have an upgraded processor along with 5G which could make for faster data transfer speeds. The current model has a unique design, which will likely look similar—a release expected in the first half of 2022.
It’s reported that next year the 11-inch iPad Pro will get a mini-LED display, which Apple also introduced in the 12.9-inch model this year. A glass back that enables wireless charging is also a prospect. It would be interesting to see if Apple even went with this idea
Overall, Apple makes a lot of money and has thousands of suppliers that are open to collaborating. Having outsourced its supply-chain operations, Apple can now focus on designing amazing products for their customers.
The downside to being associated with a global brand like Apple is your competitors may automatically assume that your product is better, and you may lose sales. For small to medium companies, the attraction of becoming suppliers to Apple could help them thrive and establish new markets. Apple is recognized as the leader in innovation across multiple industries.
Despite its recent missteps, people are still eager to see what the company has in store and regularly. It helps support suppliers who will see new demand for their goods and services.
- Qualcomm (NASDAQ:QCOM)
- Hon Hai Precision Industry (OTCMKTS:HNHPF)
- Skyworks Solutions (NASDAQ:SWKS)
- Texas Instruments (NASDAQ:TXN)
- Samsung (OTCMKTS:SSNLF)
Apple Supplier Stocks: Qualcomm (QCOMM)
Qualcomm is a global semiconductor company that designs and manufactures wireless communications products.
It is best known for its Snapdragon mobile processors, and digital media processing units (DPUs) used in many smartphones, tablets, digital cameras, video game consoles, set-top boxes, and other mobile devices such as wearables.
Apple purchases a variety of electronic components from China’s Foxconn Technology Group (see below). An envelope power tracker, baseband processor, power management module, and a GSM/CDMA transceiver provide different functionality based on the ever-changing needs of your business.
Qualcomm has supplied Apple devices with the necessary modem technology. These are some of the devices used in power management systems and mobile networks.
Still, Apple has been in a legal battle with Qualcomm for years. At this point, Apple’s only option with Qualcomm was to partner up, and they compromised on the multi-year contract. Lately, Apple has wanted to ditch Qualcomm in favor of working on their in-house modem chips. However, it looks like they’re going for a head start by purchasing Intel’s modem chip business and merging it with their existing lines.
Nevertheless, Qualcomm is preparing to launch Apple’s modem chips and their transition to new chips in 2023. However, for the foreseeable future, QCOMM chips will continue to power Apple products for the foreseeable future.
Hon Hai Precision Industry (HNHPF)
Hon Hai Precision Industry, also known as Foxconn, is one of the largest electronics manufacturing companies in the world. It is one of Apple’s oldest and largest suppliers and one of Taiwan’s best businesses.
Foxconn is based out of Taiwan, and most people tend to think of them as Apple’s largest supplier in China because they have a lot of factories located there. Foxconn is the supplier of more than half of all iPhones today, so Hon Hai Precision Industry remains Apple’s biggest business partner.
Apple under Tim Cook has pushed for cost reduction at a number of its key factories and stores & is doing more audits in order to ensure quality is still on track. The executive also wants to diversify its supplier base. Both of these developments are not great from the point of view of HNHPF stock investors.
Nevertheless, the financials for the company remain rock solid. Hon Hai reported better earnings than expected, especially due to strong demand for new versions of the iPhone. The Taiwanese company said net income for fiscal Q3 was NT$37 billion ($1.3 billion). Analysts estimated an average of NT$32.4 billion to be made. With a total sales of NT1.4 trillion for the period, it set a company record.
However, Foxconn’s business has been struggling this quarter, and for understandable reasons. The company’s source of income is in consumer electronics, which have experienced a decline from a year ago – and this is to be expected. The semiconductor shortage also played a part in their current situation.
Apple Supplier Stocks: Skyworks Solutions (SWKS)
Skyworks Solutions is a company that has been designing and manufacturing semiconductor chips for over thirty years. Few companies in the wireless industry support advancements in data connections as much as Skyworks.
As devices continually improve, so does the need for their wireless chips. Skyworks expects each 5G phone to have $25 of chips, compared to $18 for a 4G device and $8 for a 3G device. Hence, Skyworks stock stands to benefit moving forward.
Skyworks relies on the growth of other markets to become more diversified. This will gradually decrease its dependence on Apple, its largest customer. Skyworks Solutions purchased Silicon Laboratories’ infrastructure and automotive business in a $2.75 billion all-cash deal as part of this initiative. The Silicon Labs deal includes their power and isolation chips used in electric cars, among other products.
This acquisition isn’t surprising since Silicon Labs had previously looked to grow its business. Skyworks is excited to be expanding into industries like electric, hybrid, and 5G because they see this as a place where their technology can shine. Finally, Skyworks could use this to reduce their dependence on Apple, which accounted for 56% of their sales last year.
Texas Instruments (TXN)
Apple has been using Texas Instruments for display parts, but it currently has a shortage. Because of the iPhone’s high-resolution OLED display, which uses different technology than other models, there is an issue with the supply chain and Texas Instruments. Apple had a difficult supplier situation with their supply of components like iPhones. They tried to introduce new models but ran into some issues that led to shortages while they worked out the changes required in the supply chain.
Apple has had tough times this year due to the shortage of iPhone models and a weak market as a whole. While the company still makes enough of its popular Apple Watch, it faces challenges with other products. Texas Instruments is at the forefront of manufacturing and must ensure they do everything possible to have a competitive edge. They are part of an industry with increasing demand and competition, which they rely on manufacturing capacity provided by other foundries.
U.S. chipmakers kicked off earnings season with Texas Instruments posting results and forecast that beat analysts’ expectations. The company just posted fourth-quarter earnings that were $2.27 a share. In comparison, they posted earnings last year of $1.80 a share. Revenue jumped significantly from a year ago, reaching $4.83 billion in the most recent quarter.
Texas Instruments has announced its first-quarter earnings, expecting $2.01 and $2.29 a share on revenue of $4.5 billion to $4.9 billion. In contrast, TXN stock analysts predicted earnings of only $1.87 a share on revenue of $4.37 billion.
David Pahl of Texas Instruments has said that the business is now putting “additional strategic emphasis on industrial and automotive” in the wake of earnings. Pahl says that out of total revenue, 41% came from industrial sales and 21% from auto sales.
Apple Supplier Stocks: Samsung (SSNLF)
Samsung is the largest South Korean chaebol (family-owned business) and the largest electronics company in the world by revenue. The main Korean shares of SSNLF stock are a bellwether of Seoul’s KOSPI 200 index.
The tech giant has been ranked among the top ten global brands for years now and has been an influential brand for decades. Samsung products are known for their quality, reliability, innovative features, and design which have helped it gain worldwide recognition with its Galaxy line of mobile phones, which have become one of the most popular brands today.
Samsung and Apple are two of the biggest tech giants in the world. They have been fighting for a while now. This case is unique because Samsung and Apple have a symbiotic relationship. That’s why it might strike you as surprising to see this company on a list of Apple supplier stocks. Through its many subsidiaries, Samsung sells parts to manufacture the same devices accused of copying Apple, leading to costly litigation.
Overall, Samsung is a behemoth that dominates its competition worldwide and in South Korea, a major pillar of the economy. Even if you put its relationship with Apple to one side, Samsung is a huge conglomerate with diversified business lines. So, one need not worry when investing in this one.
On the publication date, Faizan Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. He does not directly own the securities mentioned above.