Shares of many component suppliers for the smartphone industry surged in June 2019, according to data from S&P Global Market Intelligence. Broad-range communications chipmakers Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:AVGO) rose 13.8% and 14.4%, respectively, while radio frequency chip specialist Skyworks Solutions (NASDAQ:SWKS) gained 16%. Other phone-related chipmakers also moved higher; this is just a small sample of a larger trend.
Phone-chip specialists moved largely in lockstep throughout June:
The main driver behind this general surge came from China, where trade tensions with America showed signs of relaxing. This tendency also moved broader market benchmarks like the S&P 500 index nearly 7% higher last month, but smartphone sales have been suffering more than many other industries under the current tariffs and trade tensions. Hence, it makes sense to see this sector bouncing back a bit quicker when the tide turns.
That's not all that happened last month, of course.
- Qualcomm's stock took a small haircut around the same time, reacting to rumors that major customer Apple (NASDAQ:AAPL) might want to buy Intel's mobile modem business. An Apple with in-house modem designers would eventually do less business with Qualcomm.
- Skyworks didn't provide a full financial report in June, but did update its third-quarter guidance on June 4. This company counts Chinese technology titan Huawei among its most important clients, so the U.S. government sanctions against that company will hurt Skyworks' sales in the near term. Huawei accounted for 12% of Skyworks' total revenues in the first half of 2019, and the new third-quarter sales outlook sits 7% below the original forecast.
- Broadcom published mixed second-quarter results with a side of soft full-year revenue guidance, resulting in the trough the chart shows near June 13. Huawei also loomed large in that report, explaining most of Broadcom's weak spots.
The beat goes on, leaving plenty of room for further volatility in this fast-moving industry.
Improving market conditions are not the same thing as a completely green light, of course. The Trump administration is still working out its differences with Beijing and a final settlement is nowhere in sight. The Huawei question will probably follow suit when the larger Chinese issue meets its end.
Intel hit the pause button on its public auction of that wireless modem business, reportedly focusing on a single buyer that looks a lot like Apple.
On the upside, third-party market reviews have started to show improving demand for new iPhones and other smartphone flagships. Earnings reports from Apple and its suppliers will start to drop later this month, giving investors a much better view of how the market is shaping up.