Apple (NASDAQ:AAPL) 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 (NASDAQ:QCOM), Taiwan Semiconductor Manufacturing Company (NYSE:TSM), and Samsung (NASDAQOTH:SSNLF) appear poised to lose some business as a result of next year's iPhone lineup.
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 (NASDAQ:INTC), though it's widely believed that Qualcomm has the majority share in the current lineup.
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.
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.
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.