Chatter that Apple (AAPL) is readying an iPhone 6 should excite not only Apple shareholders but also its suppliers. Without any substantial phone updates in 2014, a bigger screen for the iPhone 6 should generate strong demand. Apple could charge at least a $100 premium on the iPhone 6, which would trouble carriers because they might need to absorb the cost by subsidizing the increase. They could also pass the cost on to consumers, a move that is more likely thanks to continued interest in Apple devices.
There are four suppliers investors should watch as Apple gets closer to the release of the iPhone 6.
GT Advanced Technologies
GT Advanced Technologies hit the $18 mark several times in 2014 before selling off sharply in recent sessions. It closed at $13.21 recently. GT Advanced will supply sapphire for Apple devices. If Apple uses sapphire, it will be a blow to Corning (GLW), which supplies gorilla glass for many smart phone makers. GT recently received a $111 million payment from Apple in its first quarter related to the production activities for sapphire. GT reported sharply lower gross margin and equipment orders last quarter. For the year, revenue is expected to be as high as $800 million. Earnings will be between $0.02 – $0.18 per share.
OmniVision makes sensors for cameras. Worries that Sony would win business from OmniVision’s business held down shares. In the last few months, investors realized OmniVision’s business was sound. This helped push shares close to its 52 week high. Inclusion of sensors from Omnivision for the iPhone 6 would be a big win for the company.
Qualcomm supplied the LTE modem and transceiver for Apple in the iPhone 5S. Trading at yearly highs, an iPhone refresh would help the chip giant hold gains.
Much of Cirrus Logic’s business (thought to be two-thirds) depends on Apple. The company will clearly benefit from the release of iPhone 6. Meanwhile, Cirrus is diversifying its reliance on Apple. It recently bought Wolfson Microelectronics, a British firm. The acquisition will strengthen Cirrus’s offerings in the audio market, which includes audio codecs and HD audio software.