When investors found out that TriQuint Semiconductor (Nasdaq: TQNT) had won a bigger piece of the iPhone cake from Apple (Nasdaq: AAPL), TriQuint shares skyrocketed. That made sense -- iPhones are high-volume products and TriQuint stole revenue share in the iPhone 4S from fellow radio-chip suppliers Avago (Nasdaq: AVGO) and Skyworks Solutions (Nasdaq: SWKS). "Of the three, TriQuint should see the largest boost to its sales from its inclusion in the phone," explained fellow Fool Eric Bleeker.
So imagine my surprise when TriQuint offered timid fourth-quarter guidance last night, at least partly due to weak orders from Triquint's "largest customer." A quick glance at a recent 10-K filing reveals that customer's identity: Hon Hai Precision Industries subsidiary Futaihua Industrial (Shenzhen), a part of the manufacturing conglomerate that assembles many of Apple's products. So yeah, we're talking at least partly about Apple here.
Like audio-chip provider Cirrus Logic (Nasdaq: CRUS) and camera-sensor builder OmniVision Technologies (Nasdaq: OVTI), among other Apple suppliers, TriQuint bends over backwards not to mention Apple by name, so we have to follow these bread crumb trails instead. "I'm sorry," CEO Ralph Quinsey told a nosy analyst last night, "I'm not going to answer any specific questions about our largest customer relationship based on an agreement we have with the customer."
The reduced demand from Apple turns out to be in legacy products, chips meant for older models of Apple gear. So TriQuint may feel great about its iPhone 4S business but underestimated the lost business as iPhone 3GS, iPhone 4, and old iPad orders are winding down.
Of course, the disappointing guidance for adjusted earnings of about $0.07 per share on roughly $220 million in sales isn't all Apple's fault. Management also pointed fingers at "softness in the macro environment" plus weak orders from China. We can't help but keep an eye on the global economy, but you ought to make a mental note to track the Chinese mobile market a bit closer. Everybody wants to rule the Chinese markets these days, so some research in that area should pay off handsomely. Adding China Mobile (NYSE: CHL) and China Telecom to your Foolish watchlist will give you an instant leg up in that quest.
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