Oyour topic of Stocks of Apple Component Suppliers – which includes a diverse set of companies that supply components for Apple’s iPhones and other devices, is down about 8% year-to-date in 2022, roughly in line with the broader Nasdaq-100, although it has had a Underperformed shares of Apple (NASDAQ : AAPL), which is down just 2%. So what is the weight of the issue and what is the short-term outlook?
While the tech sector in general is affected by rising interest rates, Apple’s suppliers are affected to some extent by ongoing shortages of semiconductors, Covid-19-related disruptions in Asia, and rising costs. Additionally, demand growth could also cool off in the face of the 2020-2021 pandemic period, as Apple’s sales growth moderates. Despite the release of new iPhones and high-end Macs, apple income is poised to grow to high single-digit levels, after surging more than 33% in fiscal 2021. Demand for the recently launched iPhone SE has been weaker than expected, and Apple apparently plans to make 20% less of SE devices over the next quarter, according to Nikkei Asia. Apple has also reportedly cut orders for its AirPods wireless headphones by around 10 million units. These factors are also likely to affect Apple’s supplier growth rates during 2022.
However, things should improve as the semiconductor supply shortage finally eases and also when Apple launches its next-generation iPhone 14 this fall. The smartphone is expected to feature more substantial upgrades and possibly design changes compared to the iPhone 13, which bodes well for carriers from both a volume and content per device perspective. Furthermore, the ongoing 5G transition is also likely to help vendors, which are largely focused on semiconductors, as mobile device vendors have been looking to equip their mid-range and entry-level models with 5G.
Within our theme, materials specialist Corning (NYSE:GLW), which is a key supplier of the glass used in iPhones, has been the strongest performer, with its shares up about 3% year-to-date. of the year, due to its strong fourth quarter. Results On the other hand, Qorvo (NASDAQ:QRVO), a semiconductor player that supplies RF solutions, has fared worse, with its shares down roughly 17% year-to-date.
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| returns | March 2022 MTD [1] |
2022 the last year [1] |
2017-22 Total [2] |
| GLW Back | -5% | 3% | 58% |
| S&P 500 return | 6% | -3% | 107% |
| Return on the Trefis MS portfolio | 5% | -6% | 270% |
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[1] Month to date and year to date as of 03/30/2022
[2] Cumulative total return since the end of 2016
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