What happened
Even by the awful standards of Thursday's market, Skyworks Solutions (SWKS -0.86%) was a dog of a stock. The specialty tech company's share price suffered a nearly 4% decline, nearly double the 2.1% drop of the S&P 500 index on the day. The direct reason was a discouraging development with the company's most important business partner.
So what
It's only a slight exaggeration to say that when tech titan Apple (AAPL -0.57%) sneezes, Skyworks catches a cold. Apple is a major customer for Skyworks' radiofrequency (RF) solutions, which it packs into its ever-popular line of mobile devices. These days, Apple is responsible for a whopping 55% of its supplier's total revenue.
So it's understandable that news concerning such devices affects Skyworks too, and that was the case on Thursday. That morning, Bank of America analyst Wamsi Mohan downgraded the stock to neutral from his previous tag of buy. It's rare when Apple stock gets a downgrade, particularly from such a prominent financial institution.
Mohan's move comes on the heels of a very impactful article in Bloomberg, which was initially published after market hours on Tuesday. Citing "people familiar with the matter," the financial news agency said that Apple is retreating from its plans to bump up production of the new iPhone 14 "after demand failed to materialize."
Now what
Any pronounced downward shift in production would be clearly and obviously detrimental to Skyworks. Although the company's fortunes aren't entirely tied to the those of the King of Cupertino, Apple is an essential customer at the moment and what it does matters. Skyworks investors should keep a sharp eye on how, and if, this story develops.
