Which Apple Chip Suppliers Will Face The Biggest Impact From iPhone Production Cuts?

Apple Inc AAPL is reportedly looking to cut its iPhone production forecast for 2021 by 10 million due to supply chain issues.

How The Chip Crunch Is Hurting Apple: Supply constraints are beginning to show impacts on premium-tier handset production, BofA Securities analyst Vivek Arya said.

Shortages are impacting several areas within the supply chain, including components such as RF/wireless shipped by Broadcom Inc AVGO and OLED display drivers shipped by Texas Instruments Incorporated TXN, he added.

Modest capacity constraints, the analyst said, were expected given Apple highlighted shortages on its June quarter earnings call and lengthier iPhone 13 lead times relative to the prior iPhone 12 rollout.

The magnitude of potential cuts comes as a surprise for investors, the analyst said.

Any downward production revisions will likely impact most suppliers, even those with healthier capacity situations, Arya said.

Related Link: An Easy-To-Use Cheat Sheet For Apple Suppliers

Suppliers With High Exposure To Apple Apple's strong presence in the smartphone market and higher 5G mix would mean Cirrus Logic, Inc. CRUS, which derives roughly 80% of sales from Apple, is among the most impacted, Arya said.

RF suppliers such as Skyworks Solutions Inc SWKS, Qorvo Inc QRVO and Broadcom will also see meaningful impact, the analyst said. These companies benefit from strong units and increasing content in latest generation devices, he added.

Suppliers With Moderate Exposure: Teradyne, Inc. TER, which derives about 25% of sales from Apple; Texas Instruments Incorporated TXN with 8%-10% exposure; NXP Semiconductors NV NXPI with 5%-10% exposure; II-VI Inc. IIVI with 5%-7% exposure; and Intel Corporation INTC with 3%-4% exposure, are among those which will be moderately impacted, Arya said.

Suppliers With Little or No Exposure: Advanced Micro Devices, Inc. AMD, Marvell Technology Inc. MRVL, MACOM Technology Solutions Holdings Inc MTSI, Microchip Technology Inc. MCHP, ON Semiconductor Corp ON, Ambarella Inc AMBA and Wolfspeed, Inc. WOLF are chipmakers with little or no exposure to Apple, the analyst said.

Intel and AMD, the analyst added, hold exposure mostly to Macs, and should see minimal/no impact from iPhone headwinds.

Related Link: What Apple Analysts Are Saying About New iPhones, Early Demand Trends

Photo: Courtesy Apple

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