Our Theme of Apple Component Supplier Stocks which includes a diverse set of companies that supply components for Apple’s iconic iDevices – is up by about 9% year-to-date, on an equally weighted basis, compared to the S&P 500 which has gained about 6% over the same period. The theme remains up by about 47% since the end of 2017, versus about 29% for the S&P. Qualcomm (NASDAQ:QCOM), up 34% year-to-date (YTD), is the major driver of the theme’s return this year. On the other side, Jabil Circuit (NYSE:JBL), in fact, is down roughly -20% this year.
While suppliers have not fared nearly as well as Apple (up 60% this year) – due to supply chain disruptions and the market’s preference for asset-light, high growth companies, things could change in the coming quarters. Apple is set to launch as many as four new 5G iPhones in the coming weeks, and anticipation surrounding the devices is high. Apple has apparently ordered 75 to 80 million 5G iPhones for 2020, in line with last year’s orders of 75 million, indicating that demand is staying strong despite the current pandemic. Strong demand for the 5G iPhones, and more broadly for computing and communication devices, through Covid-19 and after could help these companies expand.
Qualcomm (QCOM) sells application processors, modems, and licenses wireless technology to key handset manufacturers. Apple is likely to use Qualcomm’s modems in all its new 5G devices. The stock is up by about 33% year-to-date.
Qorvo, Inc. (QRVO), is a semiconductor player that supplies RF solutions focused on cellular, Ultra-wideband, and Wi-Fi to manufacturers of mobile products such as smartphones, wearables, and tablets. The stock is up by about 2% year-to-date.
Skyworks Solutions (SWKS), manufactures semiconductors for use in radio frequency (RF) and mobile communications systems. The stock has rallied 16% this year.
Texas Instruments Incorporated (TXN), the semiconductor major has supplied a variety of parts for Apple in the past. The stock is up 11% this year.
Jabil Circuit (JBL), is a manufacturing firm that makes encasements for Apple’s iPhones and iPad. Jabil stock is down -20% this year, as the Coronavirus impacted the company’s electronic manufacturing services business.
Corning (GLW) produces specialty glass, ceramics, and related materials. The company has been the key supplier of the glass used on iPhones. The stock is up 12% this year.
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