Apple’s (NASDAQ:AAPL) success has come from its popular products including the Mac, iPod, iPhone and iPad. In the process, Apple has become the second most valuable public company in the world with a market cap of more than $300 billion. Apple traditionally competes with large manufacturers like Dell (NASDAQ:DELL) and HP (NYSE:HPQ) in the personal computer market, Research in Motion (NASDAQ:RIMM) and Nokia (NYSE:NOK) in the mobile phone market, and Amazon (NASDAQ:AMZN) in the e-reader market.
Besides driving value for Apple, the company’s popular products are delivering value to component suppliers worldwide. We estimate that five leading Apple component suppliers will account for roughly $17 billion of Apple’s direct costs in 2011, or 31% of the total $56 billion in expected direct costs.
These suppliers provide the key components for Apple products that are typically assembled by third party vendors in Asia (Foxconn, Quanta Computer, etc.).  Our research shows that the main beneficiaries of Apple’s success (from a component supplier perspective) are Samsung, LG Display (NYSE:LPL), Intel (NASDAQ:INTC), Infineon (PINK:IFNNY) and Broadcom (NASDAQ:BRCM).
For the purposes of our analysis, we have assumed that Apple will continue to source components from the same set of suppliers for its key products in 2011. The chart below illustrates our estimates of the revenue these suppliers are expected to earn next year strictly from their business with Apple.
We estimate that Samsung will earn around $7.8 billion from Apple in 2011. Based on our projections that Samsung will generate about $150 billion in revenues during 2011, this means that Apple alone could represent around 5% of Samsung’s 2011 revenues. 
Samsung supplies A4 processors and NAND Flash memory for the iPhone 4 and iPad. The company also supplies DRAM Memory for the iPhone 4 and iPod as well as AC Power Adaptors for Macs. Based on the data provided by iSuppli, we estimate that Samsung earns around $64 on each iPhone 4,   $88 on each iPad,   $19 on each Mac,  and $27 on each iPod.   These numbers become substantial when combined with our estimated unit sales totals for 2011 of 69 million iPhones, 20 million iPads, 50 million iPods and 17 million Macs. There could even be significant upside to our estimates if the sales mix of large memory devices (e.g. 64 GB iPhone and iPod Touch) were to increase in 2011.
LG Display Comes in a Distant Second
We estimate that LG Display will earn around $4.2 billion from Apple in 2011. If LG Display can generate revenues of $26 billion in 2011 (as per our estimates), it would place Apple as the source of 16% of LG Display’s total revenues next year. 
LG Display supplies both the LCD display and touchscreen interface for the iPhone 4, iPad and iPod Touch, and earns an estimated $29 on each iPhone 4 and iPod Touch, and $80 on each iPad.   The iPod Touch has similar features to the iPhone 4, excluding mobile phone capabilities. Hence we believe that the LCD display and touchscreen interface cost for the iPhone 4 will be the same for the iPod Touch as well. We also estimate that Apple will be able to sell around 22 million iPod Touch units,  out of the total 50 million iPods that we expect to be sold in 2011.
Intel’s Revenues are Particularly Sensitive to Mac Demand
We estimate that Intel will earn around $2.5 billion from Apple in 2011. Based on our projections of $45 billion in total revenues for Intel next year, Apple will likely constitute more than 5% of Intel’s revenues during 2011.  Intel earns the most from Apple’s Mac units, with its Core 2 Duo Processor for Mac Mini reportedly costing $118, a substantial amount given that the low-end price for Mac Mini is $599.  The $118 price tag is ahead of Intel’s average price for notebook microprocessors in 2010 of about $102.
We estimate that Intel earns about $154 on each Mac, meaning that 5% of its revenues are exclusively sensitive to Mac sales. This $154 is based on average Mac pricing of around $1,300, wherein we have applied a 50% premium on Intel’s average microprocessor price and 30% premium to Mac Mini’s microprocessor cost.
Infineon and Broadcom Heavily Depend on Apple’s Success
We estimate that Infineon and Broadcom will earn around $1.5 billion and $1.3 billion, respectively, from Apple in 2011. With Infineon’s revenues expected to be around $5 billion (including the Wireless Solutions business sold to Intel), Apple could single-handedly provide a whopping 30% of the company’s revenues in 2011.  We anticipate that Broadcom’s revenues for 2011 will be around $7 billion, meaning that Apple could represent around 14% of Broadcom’s revenues next year. 
Infineon sells Baseband chips and transceivers used in iPhone 4 and iPad, while Broadcom sells Wi-fi/Bluetooth chips used in iPhone 4 and iPad, GPS system used in iPhone 4 and WLAN chips used in Macs.
While Apple investors keep close watch over impending unit sales reports, these five key suppliers could also find their future fortunes to be notably dependent on Apple’s continued success.
- Information available in Apple annual SEC filings [↩]
- Samsung 2011 revenues extrapolated from 2008-2009 annual SEC filings and quarterly SEC filings for Q1-Q3 2010 [↩]
- iSuppli teardown analysis of iPhone 4 16GB model [↩] [↩] [↩] [↩]
- As per iSuppli data for every iPhone 4 16GB model, the A4 processor, NAND Flash Memory and DRAM memory costs $52. However, according to BroadPoint AmTech, the iPhone 4 32GB model costs $24 more than the 16GB model. Since Samsung is the main supplier of memory for iPhone 4, the additional cost pertaining to 32GB model should be accounted to Samsung. Assuming that iPhone 4 16GB and 32GB models are sold in equal quantity, the average cost for Samsung raw materials for iPhone 4 comes out to be $64 [↩]
- iSuppli teardown analysis of iPad [↩] [↩] [↩] [↩]
- According to iSuppli, the cost of material of three models viz. 16GB, 32GB and 64GB mainly differs due to different cost for NAND Flash memory, which is supplied by Samsung. According to the Apple’s FY Q3 2011 and FY Q4 2011 earnings conference calls, the iPad average pricing was about $640 and $645 respectively. Also, the pricing for the three versions of iPad are $499 for 16GB iPad, $599 for 32GB iPad and $699 for 64GB iPad. This indicates that the average iPad pricing is closer to the iPad 32 GB pricing. Hence we can take a reasonable assumption that the average cost for Samsung raw materials is nearly the same as is for the 32GB iPad model. As per iSuppli, the raw material cost for Samsung for 32GB model is $59 [↩]
- iSuppli teardown analysis of Mac Mini. Since Mac Mini is one of the cheapest Mac available, we have applied a premium of around 30% to the cost of materials related to Mac Mini to come out with an average raw material cost for each raw material supplier of Mac [↩] [↩] [↩]
- iSuppli teardown analysis of iPod Nano [↩]
- According to iSuppli, Samsung raw material cost for iPod Nano is $5 for SDRAM and $5 for Application Processor. However, since iPod Nano is one of the cheapest iPods, we have factored-in the higher raw material cost for higher priced iPods and applied it to the raw material cost on a pro rata basis [↩]
- LG Display 2011 revenues extrapolated from quarterly 2009 and 2010 earnings reports [↩]
- As of August 2010, there were 120 million iOS devices in use. Asymco also estimated that out of these, around 45 million iPod Touch are in use. GigaOm estimated that around 32 million iPod Touch devices are in use as of December 2009. Hence 13 million iPod Touch devices were sold during the first 8 months of 2010. We estimate that around 20 million iPod Touch will be sold in 2010 and 22 million for 2011 [↩]
- See Trefis’ Intel model for annual revenue estimates [↩]
- Infineon 2011 revenues extrapolated from annual earnings reports for FY 2008, FY 2009, and FY 2010 [↩]
- Broadcom 2011 revenues extrapolated from 2009 annual SEC filing and quarterly SEC filings for 2010 [↩]