Suppliers of Apple Inc (NASDAQ:AAPL)Will Benefit From iPhone Launch

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By Mark Michaels on September 9, 2014 Company, Technology & Software

Apple Inc (NASDAQ:AAPL) recently extended invitations to certain members of the media for what very likely could be the unveiling of the next generation of the company’s iPhone.

In anticipation of this launch on Tuesday, Apple’s stock has grown very nicely over the past few weeks. While much of the buzz among investors has been in regards to Apple Inc, it would be wise for investors to also pay attention to the following companies that could benefit from the launch of the new Apple iPhone 6.

NXP Semiconductor (NASDAQ:NXPI)

According to an individual familiar with the company, the next generation iPhone 6 will feature a built in near field communication (NFC) chip. This technology allows devices connect with each other wirelessly by putting them near each other. That chip will be supplied by NXP Semiconductors (NASDAQ:NXPI)

NFC technology isn’t exactly new, given that Android phones from companies like Samsung and HTC have featured NFC technology for quite some time. However, the potential for NXP to benefit greatly from the iPhone 6 is great for multiple reasons. Namely, NXP will very likely experience substantial incremental increases in revenue that are related to NFC chips from the demand and sale of iPhone 6 handsets.

For the long term, it is almost definite that more and more of Apple’s smartphone devices will feature NFC chips as the technology extends to its iPhones that are sold at lower price points. Additionally, it is not very likely that the company will build NFC chips in only its iPhones, especially if it is using the NFC technology for a new payment service. Apple’s upcoming next generation iPads will also very probably feature NFC technology, and it is very likely that NXP will be the supplier of these chips.

Broadcom (NASDAQ:BRCM)

Broadcom (NASDAQ:BRCM) is a company that supplies semiconductors to wired and wireless communication devices, which deliver voice, video, data, and multimedia to connections in the office, home, and mobile.

About 28.3 percent of the company’s mobile and wireless business is coming from the sales of chips to Apple. These chips are mostly general connectivity chips, but Broadcom also supplies touch controllers for Apple’s devices.

One potential benefit for Broadcom is that during the release of the iPhone 6, Apple will likely include an 802.11ac Wi-Fi chips. Since these chips yield more revenue per unit than the older chip models used in the iPhone 5S, Broadcom could definitely gain more revenue per unit of iPhone 6 sold when the smartphone finally hits the market.

However, it is important to note that most of Broadcom’s connectivity chips are already installed in most, if not all, premium smartphones that are on the market today. This means that successful sales of the iPhone may not even push Broadcom’s bottom line upwards.

Taiwan Semiconductor (NYSE:TSM)

Rumors have been spreading for a long time that Taiwan Semiconductor (NYSE:TSM) would be the manufacturer for Apple’s A-series chips. However, in the years 2011, 2012, and 2013, it was Samsung that supplied the chips for the company’s iPhone and iPad units.

However, rumors insist that this year, Apple will make the switch to Taiwan Semiconductor as its supplier of its applications processors.

This means that Taiwan Semiconductor will be in line to get significant gains from the next iPhone, and most of that business should be additive to the company’s revenue base today. While there have been questions brought up about Taiwan Semiconductor facing more difficult issues later next year, especially as Samsung focuses on its 14 nanometer manufacturing technology, the company should still reap the benefits as the iPhone 6 sales ramp up.