Cirrus Logic's (CRUS -2.84%) fortunes are tied closely to smartphone giant Apple (AAPL 0.06%), as the former gets a huge chunk of its revenue by supplying audio chips to a variety of iOS devices.

That's why the chipmaker looked all set to take advantage of Apple's entry into the booming 5G smartphone market this year. However, Cirrus' latest report for the first quarter of fiscal 2021 and the forward-looking guidance for the current quarter cast doubt over the company's ability to benefit from 5G smartphones.

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Cirrus Logic Q2 guidance disappoints

The fiscal first quarter was a slow one for Cirrus Logic as Apple usually dials down the production of its current iPhones to prepare for the next-generation models. Its revenue of $242.6 million increased 2% over the prior-year period. The recent bump in Apple's hardware revenue positively impacted Cirrus' business as it got 83% of its total revenue from its largest customer last quarter.

However, the second-quarter guidance for the three months ending in September turned out to be disappointing. Cirrus anticipates revenue between $290 million and $330 million this quarter, the midpoint of which is lower than Wall Street's expectation of $315 million.

Cirrus had delivered nearly $389 million in revenue during the prior-year period, recording annual growth of 6.2%. But this year, the company's revenue could drop around 20% annually in the current quarter if it hits the midpoint of its guidance range.

Worried woman looking at a laptop.

Image source: Getty Images.

This is bad news for Cirrus Logic investors as the company's performance should have ideally picked up the pace given its close relationship with Apple. But that may not be the case. There are rumors that Apple could drop the EarPods from the retail packaging of its next-generation iPhone models that are expected to launch this fall.

Such a move could have a material impact on Cirrus' top line in the forthcoming quarters, exposing the risks of relying too much on just one source for a lion's share of the total revenue.

Can Cirrus make a comeback?

Apple CFO Luca Maestri recently confirmed that the supply of the new generation of iPhones will "be available a few weeks later" as compared to last year's late September launch. Additionally, recent Apple supply chain rumors indicate that the company could stagger the release of its upcoming iPhone models into two parts.

According to a DigiTimes report (via MacRumors), shipments of components of the rumored 6.1-inch iPhone models started recently. Components for the 6.7-inch and 5.4-inch models are expected to start in late August. In all, shipments of critical components such as flexible boards are expected to hit a peak around two to four weeks later than the usual schedule.

So, there may be light at the end of the tunnel for Cirrus Logic considering the potential delay in the launch of this year's iPhones. A change in Apple's production schedule is bound to have a major impact on the company's guidance, and management indicated the same in the latest shareholder letter, saying: "While this generally has little to do with the health of our business, it does make predicting the Q2 and Q3 revenue split particularly challenging as we expect to be ramping heavily at this quarter boundary. As a result, small changes in timing could cause material swings in revenue for each quarter."

That means Cirrus could make a comeback later in the year. But investors shouldn't be betting on the same as other chipmakers who rely heavily on Apple for a big portion of their total revenue are singing a different tune. Skyworks Solutions, for instance, delivered solid guidance numbers that blew past estimates, reaffirming its credentials as a top 5G stock. Qorvo also enjoyed a similar result.

Cirrus' problems seem to be company-specific and that doesn't inspire a lot of confidence. Moreover, the stock trades at 28 times trailing earnings as compared to the five-year average multiple of 22.6. This seems overvalued, considering the anticipated dip in the company's top line this quarter, making Cirrus Logic a risky bet under the circumstances.