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A number of Wall Street firms in recent days have upped their estimates for Apple’s (NASDAQ:AAPL) iPhone, citing stabilization in regions like China and even in the U.S.
And while the benefits are obvious to Apple, the read-through for Apple suppliers is less clear.
Research firm KeyBanc noted that its own survey from June showed “mixed” results, with sell-through for the iPhone 15 tracking “slightly above store expectations and normal seasonal trends.”
And while the data showed indexed spending rose 14% month-over-month, the firm sees the data as “neutral” for companies in the Apple supply chain, including Broadcom (AVGO), Cirrus Logic (NASDAQ:CRUS), Qualcomm (NASDAQ:QCOM) and Skyworks Solutions (NASDAQ:SWKS).
Apple has long had a complex relationship with companies in its supply chain. The iPhone maker has worked with others to provide components for its devices, only to eventually try to create that component in-house and nudge the supplier out. Perhaps the most famous example is that of Intel (INTC). Apple transitioned to Intel chips in Macs in 2005, providing Intel with a key source of revenue for its x86 processors. In 2020, it switched Macs over to its own line of Apple silicon, the M-series. Apple unveiled the M4 chip in May, bringing the silicon to the newest version of the iPad Pro.
Apple has tried to do something similar with Qualcomm, albeit to little success. For years, Apple has tried to replace Qualcomm’s modems with an in-house modem, only to fail repeatedly. That back-and-forth led to Qualcomm CEO Cristian Amon saying in March 2023 he did not expect Qualcomm to continue providing Apple with a modem chip for its iPhones after 2024.
(Several months later, the two companies extended their agreement, as Qualcomm while continue to supply Apple with modem chips until 2026.)
The future of other publicly traded companies in Apple’s supply chain may be less clear. Apple is believed to generate roughly 80% of Cirrus Logic’s revenue, but the company has been shifting more towards Android handsets as it looks to hedge its fortunes.
“…[W]e’re also continuing to win designs with Android customers, our next generation flagship smartphones,” Cirrus Logic CEO John Forsyth said on the company’s February earnings call. “During the quarter, a key Android customer began shipping its latest flagship phones featuring Cirrus Logic audio amplifiers. And we also began ramping multiple components for the early 2024 launch of another leading Android flagship device.”
Others like Broadcom and Skyworks Solutions also face Apple-related scrutiny, with the Cupertino, Calif.-based tech giant having worked on building wireless chips in-house in the past.
If Apple does make any changes to its supply chain, it’s not expected to impact the iPhone 16, slated to be unveiled in September. KeyBanc analysts said earlier this year that the next smartphone is likely to come with Apple’s A18 chip (3 nanometer size), Qualcomm’s X75 Snapdragon modem and WiFi7 chipset, and USB-C offerings from Broadcom and others.
