Apple & 5 Supplier Stocks to Gain From Upcoming 5G iPhones

Apple AAPL is slated to host an online event on October 13th that is reported to showcase new iPhones, including those that support 5G.

The tech giant is set to launch four new iPhone models, including two cheaper 5.4-inch and 6.1-inch iPhone 12 models and two 6.1-inch and 6.7-inch iPhone 12 Pro models Screens. In particular, the 5.4-inch phone will be the smallest iPhone since the iPhone SE was released in 2016. The 6.7-inch model is the largest ever.

Apple made it clear in its earnings call for the third quarter of fiscal 2020 that the new iPhones will go on sale a few weeks later than the usual late September release due to problems in the supply chain caused by the coronavirus pandemic.

According to the Bloomberg report, Apple is reportedly preparing its suppliers to mass-produce more than 75 million of the new 5G-enabled iPhones, suggesting that demand for iPhones is holding up well despite the ongoing public health crisis. In addition, shipments of the various iPhone 12 models are expected to reach 80 million units in 2020.

IPhone sales increased 1.7% year over year to $ 26.42 billion, representing 44.3% of total revenue for the third quarter of fiscal 2020.
5 suppliers ready to take advantage of 5G-enabled iPhone 12 sales
Apple has achieved its highest install base ever, with more than 1.5 billion active devices used by customers around the world. Company Zacks Rank # 3 (Hold) expects iPhone sales in the fourth quarter to benefit from strong demand for iPhone SE. Additionally, the rollout of the new 5G-supported iPhones is expected to kickstart shipping. The full list of today's Zacks # 1 Rank (Strong Buy) stocks can be found here.

In fact, analysts are raising targets for iPhone stock earnings, which in turn draws attention to notable Apple supplier stocks, including Qorvo QRVO, Skyworks SWKS, TSM from Taiwan Semiconductor Manufacturing Company Limited, Synaptics SYNA, and Broadcom AVGO.

Notably, even minor changes in demand for iPhone devices are causing a stir with Apple's suppliers. In this context, investor optimism about these vendors, who depend on the iPhone maker for a significant portion of their total revenue, should get a boost.
Performance since the beginning of the year
Qorvo, a provider of radio frequency chips, generated 33% of its sales in fiscal 2020 with Apple. This Zacks Rank # 2 (Buy) company is benefiting from increasing the ramp up of 5G smartphones. In fact, the company has raised its revenue forecast for the second quarter, citing increased demand for 4G and 5G mobile products for flagship smartphones.

The solid rollout of Bulk Acoustic Wave (BAW) filters as the economies reopen should spur sales growth. In particular, the Zacks Consensus estimate for 2020 has risen 7% over the past 60 days to $ 7.06 per share.

Additionally, Qorvo's peer in the high-frequency semiconductor market - Skyworks - is expected to benefit from the forecasted momentum in iPhone sales. In fiscal 2020, Apple accounted for 51% of Skyworks' net sales.

Zacks Rank # 3 is well positioned to capitalize on the rising demand for 5G mobile phones. The offers are often used by Samsung and Motorola, the closest Apple colleagues in the mobile area supported by 5G.

In addition, Skyworks is seeing strong momentum for BAW-compatible modules both in the mobile and in the broad market. In particular, the Zacks Consensus estimate for 2020 has increased 0.2% over the past 60 days to $ 5.8 per share.

Additionally, with its strength in the RF chip portfolio, Broadcom is well positioned to capitalize on increased iPhone demand. Apple contributed nearly 20% to net sales in fiscal 2019. The acceleration of 5G deployment, a significant increase in production, and the increase in HF levels favor the prospects of this Zacks company in third place.

On January 23, Broadcom signed two separate multi-year contracts with the iPhone maker. According to the 8K filed with the SEC, the deals are expected to generate a total of $ 15 billion for the chip maker.

In particular, the Zacks Consensus estimate for 2020 has increased 2.5% over the past 60 days to $ 22.05 per share.

In addition, Apple uses Taiwan Semiconductor's advanced chips, which are characterized by low power consumption, high performance and compact size.

In addition, Taiwan Semiconductor - the world's largest dedicated integrated circuit foundry - is well positioned to capitalize on the 5G boom, supported by the strength of robust 7-nanometer (nm) and 5-nm manufacturing processes. In particular, this Zacks company's 2020 earnings consensus mark, ranked 2nd, has risen 5.1% over the past 60 days to $ 3.3 per share.

Additionally, Synaptics' top performance should benefit from the launch of the new 5G-supported iPhones. This Zacks Rank # 2 company is a supplier of display components to Apple.

Synaptics expects total revenue of between $ 260 million and $ 290 million for the fourth quarter of fiscal 2020. It contains more comprehensive guidance than usual that takes into account the problems in the supply chain caused by coronavirus. The company expects a sales mix of mobile PC products of 45%.

In particular, the Zacks Consensus estimate for 2020 has increased 7.3% to $ 6.3 per share over the past 60 days.
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Apple Inc. (AAPL): Free Stock Analysis Report

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