When Apple Inc unveils new iPhones on Tuesday in its Apple Park “spaceship” campus, there can be important clues for the watchers of seven semiconductor stocks.
Apple exerts a sun-like gravitational pull on the worldwide electronics supply chain, affecting the prices of commodities such as flash memory chips – it absorbs 18 percent of global distribution. The iPhone manufacturer can make or break small, specialty chip providers.
The final tally of semiconductor winners and losers won’t be known until the apparatus analysts and ship rip them apart to analyze the circuit boards. That will give insight into issues like the continuing battle between Intel Corp and Qualcomm Inc to provide so-called modem chips for cellular data.
Even the restricted technical advice Apple provides on stage tomorrow could shed light on how many different businesses are faring. Here are seven stocks to watch through tomorrow’s launch.
Lumentum Holdings Inc makes what are rather called vertical-cavity surface-emitting lasers, or VCSELs for short. These are an integral part of 3D detectors that could power some of the anticipated features of this new flagship iPhone, like the ability to unlock the phone through 3D facial recognition.
The company said it has received $200 million in orders for these lasers since April. Lumentum says it’s multiple clients, but most analysts think Apple is behind the surge in orders.
What’s not clear, however, is if the new facial recognition features will be available on just the flagship version, probably named the iPhone X, or if it’s going to also be accessible on the expected iPhone 8 and 8 Plus.
Finisar Corp also makes 3D sensor inks but specializes in a higher powered version of the technology with greater range. That detector would be more acceptable for the backside of an iPhone, to help with features like augmented reality, where digital objects float over actual objects on screen.
Finisar Chief Executive Jerry Rawls stated on an earnings call on Sept. 7 that manufacturing problems mean that the business is only going to ship a few of the detectors this coming quarter, leading to earnings somewhere between $10 million and $100 million.
“I think beyond that quarter, it is totally dependent upon our lead customer and their need,” Rawls said in response to an analyst question about 3D sensor requests. “Now they are very optimistic, but I do not think I can go farther than that.”
Apple may provide a definitive answer to whether there is a 3D sensor on the backside of this flagship iPhone tomorrow.
Toshiba Corp, Samsung Electronics Co Ltd’s semiconductor unit, SK Hynix Inc and Western Digital Corp are considered by analysts to be Apple’s core providers of flash memory chips. The essential issue is that Toshiba is in the middle of selling its flash memory firm to cover losses from its ailing atomic unit.
From Apple’s perspective, this increases the prospect of shrinking from four providers to three if SK Hynix or Western Digital were to win the bidding for the Toshiba unit. Apple itself is angling to take a minority stake in the business to help guarantee memory supplies.
An integral statement from Apple tomorrow will be the storage capacity of fresh iPhones. One year ago, Apple eliminated all 16 gigabyte models, beginning all iPhones using a minimum of 32 gigabytes of storage. If Apple raises capacity throughout the board, that will raise the value of memory prices and provide Apple yet more incentive to become involved with the Toshiba war.
Imagination Technologies Group PLC used to provide the main technology for the graphics chips in the iPhone, which aids movies and games look better without draining the battery.
In June, Imagination set itself up for sale after Apple previously told Imagination that it no longer needed its own technologies and would create its own.
On stage tomorrow, Apple is expected to announce its latest computing chip for the iPhone, the A11. If Apple discloses graphics capabilities which are hugely different from what Imagination’s designs are proven to be capable of, it is going to be a sign that Apple has already stopped tapping Imagination’s intellectual property.