Please ensure Javascript is enabled for purposes of website accessibility

3 Companies Set to Lose From Apple's 2018 iPhones

By Ashraf Eassa - Feb 14, 2018 at 4:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These three suppliers could have their roles diminished in upcoming iPhones.

Apple (AAPL 1.62%) is rumored to be launching three new iPhones later this year -- two ultra-premium models with advanced organic light-emitting diode (OLED) displays and one cost-effective model, with a less sophisticated liquid crystal display (LCD). 

This smartphone lineup is expected to strengthen Apple's leadership position in ultra-high-end devices as well as in the more typical flagship smartphone price points. To the extent that this lineup can help Apple drive unit-shipment growth, the suppliers of components inside the devices should benefit, too. 

But companies such as Qualcomm (QCOM -3.30%)Taiwan Semiconductor Manufacturing Company (TSM -5.81%), and Samsung (NASDAQOTH: SSNLF) appear poised to lose some business as a result of next year's iPhone lineup. 

1. Qualcomm

Today, Qualcomm supplies Apple with stand-alone cellular modems, which are composed of a cellular baseband processor and supporting components to enable cellular connectivity. 

Apple sources cellular modems from both Qualcomm and Intel (INTC -2.86%), though it's widely believed that Qualcomm has the majority share in the current lineup. 

Two Qualcomm chips standing side by side with a hazy purple and green backdrop

Image source: Qualcomm.

That being said, KGI Securities analyst Ming-Chi Kuo, whose track record is solid with respect to publishing details about future Apple products and suppliers of components for those products, recently claimed that Intel would win the entirety of the modem orders for the next iPhone models.  

If that report is true, Qualcomm's iPhone-related revenue is set to decline substantially during the coming product cycle, as only legacy iPhone models (which don't tend to be Apple's best-selling models in any product cycle) will have Qualcomm components.

2. Taiwan Semiconductor Manufacturing Company

The modems that Intel currently sells to Apple for the iPhone 7 series, iPhone 8 series, and iPhone X devices are designed by Intel but manufactured by contract chip manufacturing giant Taiwan Semiconductor Manufacturing Company. 

However, Intel's latest XMM 7560 modem -- the model that's expected to power this year's new iPhones -- is going to be manufactured using Intel's own 14-nanometer chip manufacturing technology. 

An Intel modem being held between someone's index finger and thumb.

Image source: Intel.

Although TSMC's iPhone modem revenue won't go to zero since it will still be producing the older Intel modems for older iPhone models (as well as the Qualcomm modems in the iPhone 7 series devices), Intel's move to manufacture the XMM 7560 in its own factories should lead to a significant drop in TSMC's iPhone modem manufacturing revenue. 

Fortunately for TSMC, the company is believed to be the sole manufacturer of the applications processors that'll power the upcoming iPhones -- a much higher-value part than the cellular modem -- and the company will likely manufacture chips for other key Apple suppliers as well. So despite some losses, it seems TSMC's Apple exposure will remain high in the upcoming iPhone product cycle. 

3. Samsung

Samsung was a big winner in the most recent iPhone product cycle as it won the orders to manufacture the OLED displays found on the ultra-premium iPhone X. Samsung is also the manufacturer of the Qualcomm modems used in the iPhone 8, iPhone 8 Plus, and iPhone X. 

If it's true that Qualcomm won't be supplying any modems in the upcoming iPhones, then Samsung's chip manufacturing business should see a decrease in chip sales (all else being equal that is) from Apple's move to Intel modems in the latest iPhones. 

Samsung will still supply chips for the discounted iPhone 8 and iPhone 8 Plus models, should Apple keep them on the market. 

On top of that, it's widely believed that Samsung won't be the exclusive OLED display supplier to Apple for this upcoming product cycle, with LG Display reportedly supplying some of the panels for the rumored iPhone with a 6.46-inch OLED display. 

Samsung is still anticipated to be a critical supplier of this year's new iPhones, but its importance looks like it may diminish. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$138.93 (1.62%) $2.21
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
QCOM
$123.53 (-3.30%) $-4.21
Taiwan Semiconductor Manufacturing Company Limited Stock Quote
Taiwan Semiconductor Manufacturing Company Limited
TSM
$77.00 (-5.81%) $-4.75
Intel Corporation Stock Quote
Intel Corporation
INTC
$36.34 (-2.86%) $-1.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
311%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.