How Have Apple's Semiconductor Suppliers Been Faring?
Apple suppliers report mixed results
Semiconductor companies are reporting surprising results this earnings season, which ended March 2016. Companies with the same products reported contrasting earnings.
Joining this bandwagon was Apple’s (AAPL) RF (radio frequency) suppliers Skyworks (SWKS) and Qorvo (QRVO). Apple reported its first decline in revenues in 13 years, which impacted all its suppliers—including Skyworks, which has large exposure in the handset market.
Qorvo tops analysts’ expectations
Qorvo (QRVO) reported revenue declines for fiscal 4Q16 but topped analysts’ estimates. The slowing demand from Apple was offset by increased RF content in Samsung’s (SSNLF) flagship product Galaxy S7 and strong demand from MediaTek and Chinese (MCHI) handset makers. Moreover, the company reported sequential growth in revenue from its Wireless Infrastructure, Industrial, and Defense Segments.
The company expects the demand from China to continue in the current quarter and has reported strong guidance for fiscal 1Q17.
Skyworks miss analysts’ expectations
On the other hand, Skyworks (SWKS) reported revenue growth in fiscal 2Q16 but missed analysts’ estimates by a slight margin. The strong demand from Samsung (SSNLF) and Huawei were offset by declines from Apple.
The company’s fiscal 3Q16 guidance missed analysts’ estimates, as the company expects declining iPhone sales to continue to impact its revenue.
iPhone 7 brings new hope
However, both companies are banking on the launch of Apple’s flagship product iPhone 7 in September 2016 to boost revenue. They are also diversifying into the broader markets of IoT (Internet of Things) and automotive to generate new revenue streams as the smartphone sales slow.
Cirrus Logic’s earnings take a hit
Apart from RF suppliers, Apple’s audio chip supplier Cirrus Logic (CRUS) also reported declining sales in fiscal 4Q16. The company earned 67% of its revenue from Apple and 17% from Samsung during the quarter.
In this series, we will look at the financial performance of the three major Apple suppliers. We’ll explore the earnings impact of declining iPhone sales and the upcoming iPhone 7 launch.
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