The iPhone 6 cycle has been extremely kind to Apple (NASDAQ:AAPL) as the larger-screened devices have helped propel sales of the company's iPhone product line to new heights. This has driven substantial revenue and profit growth to the company, an impressive feat given how large Apple's business already was prior to the iPhone 6/6 Plus launches.
Although Apple is known for its aggressive supplier negotiation tactics, there are Apple suppliers that have benefited nicely from the iPhone 6 launch. Here are three of them.
No. 1: TSMC
Prior to the iPhone 6, Apple relied on Samsung (NASDAQOTH:SSNLF) exclusively to manufacture its custom-designed A-series processors. There had been rumors in the press for quite some time that TSMC (NYSE:TSM) would manufacture some of Apple's A-chips, Apple didn't actually make the oft-rumored switch from Samsung to TSMC until the iPhone 6/6 Plus.
It's likely not a coincidence that in the quarters following the iPhone 6/6 Plus launch, TSMC has enjoyed strong year-over-year revenue and net income growth:
A note of caution, though: While TSMC is believed to have won the entirety of the Apple A8 manufacturing business, it is widely expected that Apple will source its next-generation A-series processors from both TSMC and Samsung, potentially making year-over-year revenue comparisons difficult for TSMC during Apple's coming iPhone cycle.
No. 2: Cirrus Logic
On Sept. 19, when the iPhone 6 first launched, shares of Cirrus Logic closed at $22.20 per share. Although the shares have pulled back from their recent highs, the stock is still up a solid 32.2% since then.
Taking a look under the covers, Cirrus Logic -- which derives much of its revenue from selling audio chips into Apple's iDevices -- has seen very impressive revenue and profit growth since the iPhone 6/6 Plus launched:
To add to the good news that the iPhone 6/6 Plus brought to Cirrus, analyst Ruben Roy with Piper Jaffray believes that the coming iPhone 6s will use a more sophisticated (and expensive) "smart [audio] codec" from Cirrus Logic.
No. 3: InvenSense
It had been widely rumored that motion processor vendor InvenSense (NYSE:INVN) was set to win the accelerometer/gyroscope spots inside of the iPhone 5s. When that didn't happen, investors were understandably disappointed. Fortunately for InvenSense, though, the company finally won the accelerometer/gyroscope spot inside of Apple's iPhone 6/6 Plus devices.
These wins helped InvenSense post very healthy revenue growth since the launch of the devices, as shown below:
But it hasn't been all sunshine and roses for InvenSense following the iPhone 6/6 Plus design wins. For example, although InvenSense saw significant iPhone-related revenue growth, those orders came in at lower gross profit margins than some investors might have hoped.
Indeed, the Apple business has had a fairly adverse effect on the company's overall gross profit margin profile, as can be seen in the chart below:
Although InvenSense's management team recently signaled that its margins would remain under pressure over the next several quarters, both CFO Mark Dentinger and CEO Behrooz Abdi were optimistic that margins should start to improve either by the end of the current fiscal year or the start of the next one.
It might seem that the gross margin negativity has outweighed the good news on the revenue side, but even with the company's gross profit margin percentage down, the company's overall gross profits are still up:
This significant increase in gross profit has afforded the company the freedom to increase its investments in research and development, which should allow it to remain competitive in the coming years: