Semiconductor companies that provide chips to Apple for iPhones, iPads, and Macs may appear to be a safe bet for investors. Still, they also carry some risk, according to one industry analyst.
UBS analyst Francois-Xavier Bouvignies told CNBC on Wednesday that his firm has a “neutral” rating on French-Italian chipmaker STMicroelectronics due to the company’s exposure to smartphones, notably Apple.
Work with smartphone companies accounts for 30% of STMicroelectronic’s total revenue, and the company has a 25% exposure to Apple, according to Bouvignies. It’s a risk for us to have such exposure to one customer, which is always tricky to predict, Bouvignies explained.
CNBC reached out to Apple and STMicroelectronics for comment, but neither company responded immediately. Over the last few years, Apple has brought more chip development in-house, hurting smaller players in the process.
Apple and Imagination Technologies
In 2017, the Cupertino-based company decided to end its relationship with British chip designer Imagination Technologies to develop processing units for the iPhone and iPad in-house. Because of concerns about the firm’s future, shares once-listed company fell as much as 71 percent to the news.
Canyon Bridge Capital Partners, a China-backed private equity buyer, paid £550 million ($727 million) for Imagination Technologies. In January 2020, Apple and Imagination Technologies announced a new partnership.
Chipmaker Infineon
According to Bouvignies, UBS prefers German chipmaker Infineon over STMicroelectronics because it does not have the same level of exposure to the smartphone industry.
Moreover, Bouvignies shares that the automotive industry accounts for 10% of global semiconductor demand. Thus, both companies benefit from car electrification. According to Bouvignies, Infineon is the world leader in semiconductors used to manage power in automobiles. It takes over approximately 30% of the worldwide market share.
STMicroelectronics is investing heavily in the space to keep up, he added.
According to him, cars with internal combustion engines typically use around $80 in semiconductors in the powertrain. Whereas, electric vehicles use around $550.
iPhone Plans about Size
The Verge discovered the email from Jobs while collecting emails from the Epic vs. Apple lawsuit. It refers to a device called the iPhone nano. It is dated October 2010, which means the unreleased phone would have come after Apple’s flagship for the year, the 3.5-inch iPhone 4. The term nano implies that this iPhone could have been even smaller than Apple’s then-current flagship.
Apple, on the other hand, did not abandon Jobs’ strategy of developing a smaller-sized iPhone. As smartphone screen sizes grew more significant over time, Apple released the first iPhone SE in 2016. The device debuted alongside the iPhone 6S and 6S Plus, which featured 4.7-inch and 5.5-inch displays, respectively. Apple recently adopted the “Mini” moniker to represent the 5.4-inch iPhone 12 Mini. Meanwhile, in a world full of super-sized phablets, the iPhone SE 2020 is a great small iPhone to consider with its 4.7-inch display.
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