Last week, Apple unveiled its new iPhone 12 lineup. The new phones are quite likely to drive the biggest upgrade cycle for Apple since the iPhone 6 was launched in 2014, considering that they are available in multiple screen sizes, feature modified industrial designs, and operate on the next-generation 5G networks. We think Apple’s suppliers will benefit significantly from the iPhone 12 cycle, as the new iPhones could be more expensive to build, given the more advanced components and increased costs associated with 5G hardware. Our Theme of Apple Component Supplier Stocks – which includes a diverse set of companies that supply components for iPhones and other Apple devices – is up by about 21% year-to-date, on an equally weighted basis, compared to the S&P 500 which has gained about 8% over the same period and Apple (NASDAQ:AAPL) stock which is up almost 60%. The theme has returned 69% since the end of 2017, versus about 29% for the S&P 500. Qualcomm (NASDAQ:QCOM), up 49% year-to-date (YTD), is a major driver of the theme’s return this year. On the other side, Jabil Circuit (NYSE:JBL) is down roughly -12% this year.
Qualcomm (QCOM) sells application processors, modems, and licenses wireless technology to key handset manufacturers. Apple is likely to use Qualcomm’s modems in all its new 5G iPhones. The stock is up by about 49% year-to-date.
Qorvo, Inc. (QRVO), is a semiconductor player that supplies RF solutions focused on cellular, Ultra-wideband, and Wi-Fi to manufacturers of mobile products such as smartphones, wearables, and tablets. The stock is up by about 16% year-to-date.
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Skyworks Solutions (SWKS), manufactures semiconductors for use in radio frequency (RF) systems and components such as switches and amplifiers. It’s likely that more complex requirements for 5G iPhones will drive demand for the company. The stock has rallied 28% this year.
Texas Instruments Incorporated (TXN), the semiconductor major, has supplied a variety of parts for Apple in the past, although it’s not clear what role it will play with the iPhone 12. The stock is up 22% this year.
Jabil Circuit (JBL), is a manufacturing firm that makes encasements for Apple’s iPhones and iPad. Jabil stock is down -12% this year, as the Coronavirus impacted the company’s electronic manufacturing services business.
Corning (GLW) produces specialty glass, ceramics, and related materials. The company has been the key supplier of the glass used on iPhones, including the tougher “Ceramic Shield” glass used on the iPhone 12. The stock is up 24% this year.
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