Apple's (Nasdaq: AAPL) announcement that it is entering the mobile phone market with its new iPhone must have set chipmakers' hearts aflutter worldwide. With Apple's unmatched ability to design and market devices that people actually want, any company that can secure a spot is guaranteed to sell millions of chips, so it isn't too surprising that analysts are already trying to figure out which chipmakers will benefit from the iPhone.
As is well known, semiconductor manufacturers have been fighting tooth and nail for a spot in Apple's iPods, which has resulted in some big blowups at companies that have gotten the boot. Sigmatel (Nasdaq: SGTL) and PortalPlayer, which is in the process of being swallowed by graphics chip maker and Motley Fool Stock Advisor recommendation NVIDIA (Nasdaq: NVDA), come immediately to mind.
So who is coming out on top with the iPhone? An article at EEtimes quotes an FBR research report indicating the winners include Korean giant Samsung, which will supply the applications and video processor; Marvell (Nasdaq: MRVL), which takes care of Wi-Fi networking chores; Broadcom (Nasdaq: BRCM), which will provide the controller chip for the iPhone's cool touch screen; and Cambridge Silicon Radio, which takes care of Bluetooth duties. Since Apple is unlikely to spill the beans, we will have to wait for a teardown report after the iPhone becomes available to see whether the FBR report is correct.
Either way, these machinations by analysts reflect a fundamental change in the semiconductor industry over the past few years. It used to be that most semiconductors were used in electronics for military and commercial applications. Now, more than 50% of semiconductors are used in consumer electronic devices. The consumer market is different. At any one time, there tends to be just a small number of "must-have" gadgets, and the popularity of a consumer device can wane quickly. Just look at what has happened to Motorola (NYSE: MOT) with its formerly hot RAZR phone. To keep the party going, consumer gizmos need to be updated frequently, and every update provides an opportunity for a competitor to steal a spot in the new device.
As a result, I wouldn't buy any of the stocks that are reported to be supplying chips for Apple's iPhone just because they may have won Apple's business in this go-around. It won't be surprising if Apple shuffles suppliers a bit for iPhone 2.
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Fool contributor Dan Bloom owns shares of Sigmatel. He welcomes your comments. The Fool has a disclosure policy.
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