Apple’s iPhone 5: Implications for the semiconductor supply chain

August 15, 2012 — Apple Inc. is expected to release the iPhone 5 this fall. FBR Capital Markets says the smartphone could be “one of the most important catalysts for the overall chip manufacturers and service providers, as well as competitors in the handset space.”

The iPhone 5 could sell as many as 250 million units, representing one of the largest single product opportunities in Apple’s history.

What will the iPhone 5 mean for semiconductor suppliers? Incremental winners could include Qualcomm Inc. (NASDAQ:QCOM) and Fairchild Semiconductor International, Inc. (NYSE:FCS); NXP Semiconductors (NASDAQ:NXPI) could be exposed, as well as Wolfson Micro.

Qualcom could see its baseband content grow from about $8 in the iPhone 4S to $15−$18 in the iPhone 5, as Apple upgrades to a 4G LTE slim baseband modem, FBR reports. This could drive 19% of annual sales at Qualcomm’s semiconductor unit, QCT. Fairchild Semi could enjoy increasing analog and FET content in the handset, and growing AC/DC content in the device charger. Wolfson Micro could see gains from the new 19-pin connector dock. NXP Semiconductor would benefit if Apple chose to include NFC functionality.

 Device content "maintainers" likely include many of the firms supplying into the iPhone 4S: Broadcom, Avago, Skyworks, Triquint, Cirrus, TI, ON Semi, and others.

FBR does not expect 28nm baseband shortages to affect the iPhone 5 launch; however, there are risks that new in-cell touchscreen display technology could limit initial device builds while in-cell yields are low.

View the full report from FBR Capital Markets’ Craig Berger CFA, CPA; David Dixon; and Scott Thompson at bit.ly/Pp11ux.

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