When Apple Inc unveils new iPhones on Tuesday at its Apple
Park “spaceship” campus, there may be important clues for the watchers of seven
semiconductor stocks.
Apple exerts a sun-like gravitational pull on the global
electronics supply chain, affecting the pricing of commodities like flash
memory chips - it consumes 18 percent of global supply. The iPhone maker can
make or break small, specialty chip suppliers.
The final tally of semiconductor winners and losers will not
be known until the devices ship and analysts rip them apart to examine the
circuit boards. That will give insight into matters like the continued battle
between Intel Corp and Qualcomm Inc to supply so-called modem chips for mobile
data.
Even the limited technical information Apple gives on stage
tomorrow could shed light on how several other companies are faring. Here are
seven stocks to watch during today’s launch.
LUMENTUM
Lumentum Holdings Inc makes what are instead known as
vertical-cavity surface-emitting lasers, or VCSELs for short. These are a key
component of 3D sensors that could power some of the expected features of the
new flagship iPhone, such as 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 has multiple customers, but most
analysts believe Apple is behind the surge in orders.
What is not clear, however, is whether the new facial
recognition features will be available on only the flagship model, likely named
the iPhone X, or whether it will also be available on the anticipated iPhone 8
and 8 Plus.
FINISAR
Finisar Corp also makes 3D sensor lasers but specializes in
a higher powered version of the technology with greater range. That sensor
would be more suitable for the backside of an iPhone, to assist with features
such as augmented reality, in which digital objects float over real objects on
screen.
Finisar Chief Executive Jerry Rawls said on an earnings call
on Sept. 7 that production problems mean that the company will only ship a
small number of the sensors this coming quarter, resulting in sales somewhere
between $10 million and $100 million.
“I think beyond that quarter, it’s totally dependent upon
our lead customer and their demand,” Rawls said in response to an analyst
question about 3D sensor orders. “Now they’re very optimistic, but I don’t
think I can go further than that.”
Apple may give a definitive answer to whether there’s a 3D
sensor on the backside of the flagship iPhone tomorrow.
MEMORY SUPPLIERS
Toshiba Corp, Samsung Electronics Co Ltd’s semiconductor
unit, SK Hynix Inc and Western Digital Corp are believed by analysts to be
Apple’s core suppliers of flash memory chips. The key issue is that Toshiba is
in the midst of selling its flash memory business to cover losses from its
ailing nuclear unit.
From Apple’s perspective, this raises the possibility of
shrinking from four suppliers 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 assure memory supplies.
A key announcement from Apple tomorrow will be the storage
capacity of new iPhones. A year ago, Apple eliminated all 16 gigabyte models,
starting all iPhones with a minimum of 32 gigabytes of storage. If Apple raises
capacity across the board, that will boost the importance of memory costs and
give Apple yet more incentive to get involved in the Toshiba war.
IMAGINATION
TECHNOLOGIES
Imagination Technologies Group PLC used to supply the
primary technology for the graphics processors in the iPhone, which helps games
and movies look better without draining the battery.
In June, Imagination put itself up for sale after Apple
earlier told Imagination that it no longer needed its technology and would
produce its own.
On stage today, Apple is expected to announce its newest
computing chip for the iPhone, the A11. If Apple discloses graphics
capabilities that are hugely different from what Imagination’s designs are
known to be capable of, it will be a hint that Apple has already ceased tapping
Imagination’s intellectual property.
