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Apple Chip Suppliers Broadcom, NXP, Skyworks Up On iPhone 7 Hopes

Apple ( AAPL ) chip suppliers Skyworks Solutions ( SWKS ), Cirrus Logic ( CRUS ) and Qorvo ( QRVO ) stocks lifted Monday on a bullish RBC Capital report that sees fellow chipmaker Broadcom ( AVGO ) reaching $16 earnings per share on merger synergies and iPhone 7 content gains. But Broadcom’s Q2 wireless sales will likely dip $40 million to $50 million on slowing current-generation iPhone sales, RBC Capital analyst Amit Daryanani wrote in the research report. He rates Broadcom stock his top semiconductor pick, with a 180 price target. Over the next two years, Broadcom stock could reach 200, Daryanani says. In afternoon trading on the stock market today , Broadcom stock was up a fraction, trailing shares of InvenSense ( INVN ) and Qorvo, which jumped 3.4% and 3.3%, respectively. Cirrus Logic, Skyworks and Taiwan Semiconductor Manufacturing ( TSM ) stocks were up 3, 2.5% and 1.5%, respectively. NXP Semiconductors ( NXPI ) stock was up nearly 1.5%, while  Integrated Device Technology ( IDTI ) was up a fraction. Broadcom is slated to report its Q2 earnings after the close June 2. Daryanani expects Broadcom to miss consensus expectations for $3.55 billion in sales on petering Apple iPhone sales, despite stronger-than-expected Samsung Galaxy S7 sales. Apple comprises 15% of Broadcom’s sales, Daryanani estimates, with Samsung in the high single digits. Apple’s June-quarter guidance implies 40 million iPhones shipped vs. consensus views for 44 million. Near term, Apple will pose a headwind until the iPhone 7 , expected to be released in September, ramps up. “To that end, Broadcom’s FBAR (film bulk acoustic resonator) business could see double-digit year-over-year growth driven by content gains,” Daryanani wrote. Wi-Fi combo chips could also see modest average sales prices tailwinds. Earlier, Broadcom saw wireless account for 23% of sales. Daryanani expects that segment to grow 37% quarter over quarter as the company’s recent merger is factored. The former Avago Technologies bought Broadcom for $37 million in February, but kept the Broadcom name. Storage sales will likely become “incrementally worse,” Daryanani wrote. Western Digital ( WDC ) and Seagate Technologies ‘ ( STX ) recent earnings suggest a $100 million hard-disk drive total addressable market in March and a $95 million TAM in June, down 20% and 15% vs. last year. Enterprise storage is expected to account for 17% of Broadcom’s Q2 sales. Daryanani sees the segment declining 14% vs. Q1, vs. 6% sequential growth in the prior quarter.

Apple Suppliers Blame ‘Tepid’ iPhone 7 Demand On Lack Of Innovation

Taiwan Semiconductor Manufacturing ( TSM ) will grow 4% in 2016, missing projections for 5%-10% growth, as Apple ( AAPL ) cuts its iPhone 7 orders June through December, a source told the Nikkei Asian Review on Wednesday. Nikkei’s report comes on the heels of disappointing June-quarter guidance from Apple suppliers Skyworks Solutions ( SWKS ), Cirrus Logic ( CRUS ) and InvenSense ( INVN ). Tuesday, TSM reported Q1 sales that missed by $30 million and dipped 13% year over year. In afternoon trading on the stock market today , Taiwan Semi stock was down a fraction, near 23. June through December, TSM’s chip shipments will shrink to 70%-80% of year-earlier levels, sources told Nikkei. TSM is now projected for “tepid” 4% year-over-year sales growth and flat operating profits in 2016. In 2015, sales rose 7.5% to $25.95 billion. “Suppliers are saying that they are getting fewer orders for the second half of this year compared with the year-ago period,” a source told Nikkei. “The traditional peak season this year will not be able to compare to the past few years.” The report jibes with worries of a slowdown in smartphone sales. Last month, Apple missed its March-quarter Q2 sales for the first time in 13 years and guided its June-quarter sales down 15%-19% sequentially, which is the seasonal norm. The only Chinese smartphone makers showing healthy growth are Huawei and Oppo, the source said. Apple CEO Tim Cook has said his company plans to lower its channel inventories by $2 billion in the June quarter “in light of the macroeconomic environment.” Apple has tapped TSM as the sole source of its A10 processor for the iPhone 7, expected for release in September. Last year, TSM and South Korean rival Samsung both supplied the A9 processor for the iPhone 6S. About 16% of TSM’s sales stem from Apple. Nikkei estimates Apple will ship more than 200 million iPhones this year, down from 230 million in 2015. A source with a major Taiwanese supplier blamed the lack of innovation in the iPhone 7 for the weak demand, Nikkei reported.

Taiwan Semi, InvenSense Stumble Over Apple’s iPhone Shortfall

Taiwan Semiconductor Manufacturing ( TSM ) stumbled into Apple ‘s ( AAPL ) iPhone shortfall early Tuesday when it reported Q1 sales that missed by $30 million. Those results came a day after InvenSense ( INVN ) posted its first-ever year-over-year sales fall and guided to a steeper dip in June. In early trading on the stock market today , InvenSense stock crashed 20%, and Taiwan Semiconductor’s U.S. shares were down 0.5%. The stocks have lost 16% and 6%, respectively, since Apple’s fiscal Q2 sales miss — its first in 13 years — on April 26. For the March quarter, TSM reported $6.14 billion in sales and 38 cents earnings per American depositary receipt ex items, down 13% and 21%, respectively, vs. the year-earlier quarter. Sales lagged the consensus view of eight analysts polled by Thomson Reuters for $6.17 billion, but earnings met the 38-cent model. Current-quarter sales guidance for $6.66 billion to $6.75 billion would be flat at the midpoint vs. the year-earlier quarter. TSM didn’t provide an earnings view, but analysts model 40 cents per ADR ex items. Last Monday, InvenSense reported $79.5 million in fiscal Q4 sales and 2 cents earnings per share ex items, down 20% and 83%, respectively, vs. the year-earlier quarter, but in line with the consensus of 13 analysts polled by Thomson Reuters. On a year-over-year basis, fiscal Q4 was the first time InvenSense’s sales have fallen after decelerating for five consecutive quarters. It was also InvenSense’s biggest-ever EPS topple. InvenSense wrapped fiscal 2016 with $418.4 million in sales and 49 cents EPS ex items, up a respective 12.5% and 7%. Sales missed the consensus for $420.9 million, but EPS beat the 47-cent model. For the current quarter, InvenSense expects sales to fall 44% at the midpoint of its range of $58 million to $62 million and, for the first time, a 5-cent to 7-cent per-share loss ex items, swinging from a 14-cent gain in the year-earlier quarter.