It's Thursday, and semiconductor stocks are in a funk. As of 1:45 p.m. ET, shares of Advanced Micro Devices (AMD -0.91%) have already lost 5.3%, Qualcomm (QCOM 1.62%) is down 5.8%, and Skyworks Solutions (SWKS 1.42%) is taking it particularly hard on the chin -- down 7.5%.
I blame Apple (AAPL 1.19%) for all of the above.
Investors in chips stocks today have only a choice between bad short-term news and potentially worse long-term news, I fear. In the short term, the bad news is this:
iPhone 13 smartphones are in short supply this holiday season, according to a report from an analyst at KeyBanc Capital Markets, relayed by The Fly. Indeed, demand for the devices has outstripped supply since Thanksgiving. And despite reports that things had been getting better earlier this month as the delta COVID-19 pandemic switched over into an omicron COVID-19 pandemic, KeyBanc analyst John Vinh now observes that "the majority of stores" he has surveyed report not having any iPhone 13 Pro or Max phones in stock.
Granted, he concludes that this news is ultimately only neutral for companies including AMD, Qualcomm, and Skyworks that supply chips for Apple devices -- but neutral isn't good. While suppliers can presumably charge Apple premium prices in a time of constrained chip supply, fewer iPhone sales still logically implies fewer chips being sold to build those Apple products.
At the same time, you have to figure that, at some point, Apple is going to get upset at its inability to obtain all the chips it wants. This, combined with the company's already-confirmed belief that it can design better chips itself than it can buy from third-party chipmakers, creates a longer-term risk of semiconductor companies losing Apple (and eventually, companies other than Apple) as dependable customers.
In that regard, we note that Bloomberg is reporting today that Apple has begun hiring engineers skilled in building wireless communication chips, with the aim of "eventually" replacing suppliers Broadcom and Skyworks with wireless chips Apple designs in-house.
Now, you might not think that bad news for Skyworks would necessarily affect companies like AMD and Qualcomm -- and today, Skyworks is in fact faring worse than the others. One reason: A decision by Apple to design its own wireless chips appears to be part of the same story that saw Apple oust Intel as its favored chip supplier last year.
More and more frequently, it appears that Apple -- and eventually other companies -- may be deciding that it's better to design their chips in-house than buy off the shelf. Long term, that's a threat to all dedicated semiconductor companies.
And it's why pretty much everyone associated with the chip industry today is going down.