In a recent column, I highlighted three Apple (NASDAQ: AAPL) suppliers that look set to lose when Apple introduces its next-generation iPhone models later this year.
Here, I’d like to go over three Apple suppliers that are set to benefit from that upcoming product launch: Intel (NASDAQ: INTC), Qorvo (NASDAQ: QRVO), and LG Display (NYSE: LPL).
1. Intel
Beginning with the iPhone 7-series smartphones that launched in fall 2016, chip giant Intel has supplied cellular modems for some of Apple’s iPhone models, splitting the modem orders with fellow chip giant Qualcomm (NASDAQ: QCOM).
Intel is believed to have had minority modem share in the iPhone 7 series as well as the iPhone 8 series and iPhone X devices, with Qualcomm bagging the majority of the orders.
However, due to the increased capabilities of Intel’s upcoming XMM 7560 LTE modem, as well as rumored aggressive pricing, reliable analyst Ming-Chi Kuo with KGI Securities thinks that Intel will win the entirety of the next-generation iPhone modem orders. Not only should Intel benefit from a dramatic increase in sales of its latest modems to Apple, but Intel is also set to gain modem share at the lower-end of Apple’s iPhone portfolio.
Today, Apple’s lowest-end iPhone models — the iPhone SE and iPhone 6s series — use Qualcomm modems exclusively. When the new iPhone models launch later this year, it’s likely that the iPhone 6s series will be retired and replaced by the iPhone 7 series. Since some of the iPhone 7-series devices come with Intel modems, Intel stands to gain modem share.
The iPhone SE is rumored to get an upgrade to include iPhone 7-grade internals, which could mean that some iPhone SE variants will get Intel modems, too.
Put quite simply, beginning in the second half of 2018 and extending through most of 2019, Intel’s cellular modem business is poised to enjoy significant revenue growth thanks to the iPhone.
2. Qorvo
According to analyst Romit Shah with Instinet, wireless chip vendor Qorvo will displace Broadcom (NASDAQ: AVGO) as the supplier of radio frequency chips known as PAD filters in the upcoming iPhone with a 6.1-inch liquid crystal display (LCD).
That iPhone is supposed to be the cheapest of the new models Apple introduces and, not surprisingly, the one that ships in the highest quantities. Kuo thinks it’ll make up half of the shipments of next-generation iPhone models in the coming product cycle.
Shah says that the loss of the PAD spot in the 6.1-inch LCD iPhone will create a $400 million revenue headwind for Broadcom in the second half of 2018 as well as $100 million in component cost savings for Apple. If these figures are correct, Qorvo could be looking at a $300 million revenue boost in the second half of the year as a result of the design win in the 6.1-inch LCD iPhone.
3. LG Display
Samsung (NASDAQOTH: SSNLF) is believed to be the exclusive supplier of the organic light emitting diode (OLED) displays used on the iPhone X. However, according to Electronic Times, Apple will be tapping rival display maker LG Display to build some of the OLED screens for the larger version of the next-generation iPhone X devices.
It’s not clear what percentage of the orders LG Display will ultimately get — the Electronic Times report seems to indicate that LG Display is set to supply about 15 million OLED panels to Apple (though over what time frame is unclear) — but considering that LG Display is starting from zero share, grabbing a significant portion of the orders would be a clear win for the display maker.
Moreover, given that Apple is unlikely to want to be too reliant on arch rival Samsung in the coming years, I’d imagine that if LG Display successfully supplies Apple in the coming product cycle, it could gain OLED display share at Apple in future iPhone product cycles.
