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How Apple’s New iPhone Models Could Affect Semiconductor Players

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Chip stock performances in 2018

Things have been slow for the semiconductor industry in 2018 after rapid growth in 2017. The Market Vectors Semiconductor ETF (SMH) rose 36.5% in 2017 and only 8.6% in the first nine months of 2018. Stocks like Advanced Micro Devices (AMD) and Qualcomm (QCOM), which underperformed in 2017, are gaining momentum in 2018 as they revive their business and come out as strong competitors. In contrast, stocks like Micron Technology (MU), Intel (INTC), and Broadcom (AVGO), which delivered strong returns in 2017, are seeing a slump in 2018.

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Impact of Apple’s new iPhones on chip stocks

The launch event of Apple’s (AAPL) new iPhone models on September 12 resulted in some positive movement in semiconductor stocks. Between September 12 and 14, 2018, most Apple supplier stocks rose, but Cirrus Logic (CRUS) fell 3% as the iPhone maker discontinued all iPhones with headphone jacks. Cirrus Logic supplies lightning-to-headphone jack adapters for iPhones.

Some of the beneficiaries from Apple’s new iPhones were Qorvo (QRVO), Skyworks (SWKS), Micron, and Broadcom. These stocks rose 3% or more between September 12 and 14.

Intel’s stock has been growing since the Apple event on September 12, 2018, as the iPhone maker ditched Qualcomm’s modem for Intel’s modem. LG Display (LPL) and TSMC (TSM) also benefitted from Apple’s new iPhones, but other factors did not play well for them.

Apple suppliers

Apple’s assembly and foundry partners who benefit from iPhone shipment volumes were concerned that the high price of the new models would impact the shipment volumes. Even though Apple launched two iPhone models above $999, it launched one cheaper iPhone XR priced at $749, which is expected to drive volumes.

Apple’s component suppliers like Micron Technology, which supplies memory chips, would benefit from increasing content per phone. In this series, we will see how Apple’s new iPhones could impact semiconductor suppliers’ Q4 2018 earnings.

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