Apple (NASDAQ:AAPL) chip suppliers stumbled Thursday on Wall Street amid reports that, despite record iPhone 6S series shipments, the smartphone giant had stepped down its Q4 intelligence-chip orders.
Digitimes.com reports "a major analog IC supplier" disclosed that Apple slightly lowered its demand for iPhone supplies in December.
Sinking chip demand would sock Avago Technologies (NASDAQ:AVGO), Skyworks Solutions (NASDAQ:SWKS), Qualcomm (NASDAQ:QCOM), Qorvo (NASDAQ:QRVO) and Taiwan Semiconductor Manufacturing (NYSE:TSM) — all of which supply chips to Apple. All but Taiwan Semiconductor closed lower Thursday.
Overall iPhone 6S and 6S Plus shipments are expected to reach 75 million to 80 million in Q3. Over the iPhone 6S debut weekend, Apple sold more than 13 million new phones.
But, the industry insider says Apple reduced its Q4 expectations to 65 million to 70 million smartphones sold.
Apple didn't immediately return an emailed request for comment.
By the closing bell in the stock market today, Qorvo stock had taken the biggest wallop, falling 3.2%. Avago stock fell 2.3% with Skyworks stock and Qualcomm stock both down 1%. Taiwan Semiconductor stock closed up 0.5%.
Intel Finally Gets Apple SKU?
The potentially depressed IC orders followed recent revelations that Apple employed both Samsung and Taiwan Semiconductor for its A9 processor, trumping speculation that Taiwan Semiconductor completely won the chip.
Taiwan Semiconductor and Samsung have long battled for Apple's iPhone processors.
Chipworks reported Monday that it found differing processors in otherwise identical iPhone 6S phones.
Cowen & Co. analyst Timothy Arcuri sees this as Apple's "insurance" policy.
"We believe that Apple had planned to use Samsung for the initial wave of A9 builds, but also developed the Taiwan solution as insurance against yield and allocation issues," Arcuri wrote in a research report.
Companies often do dually source chips to "exert pressure on the foundries and ensure adequate supply," but Apple's move was a first in that Samsung and Taiwan's processors aren't equal. Taiwan's version is about 9% larger at 16 nanometers, Arcuri wrote.
With reports that Samsung has backed out of the A10, Arcuri sees Apple tapping Intel (NASDAQ:INTC) for a future processor.
"Intel desperately wants the Apple foundry business," he wrote. "This could be a window."
Ten nanometers won't be available for the A10, but Intel's 14-nanometer chips would offer a "meaningful improvement" in performance and power consumption over Taiwan's 16 nanometer chip and Samsung's 14 nanometer chip," Arcuri wrote.
"The Intel process is sufficiently different/better that if Apple goes with Intel as a foundry, it would result in a single source for Intel SKUs," he wrote.
Bill Leszinske, Intel vice president of technology, told IBD he "won't speculate on what Apple will or won't do."
Semiconductor Advisors analyst Robert Maire, on the other hand, told IBD he sees Intel and Micron's (NASDAQ:MU) 3D XPoint chip as a great iPhone fit that could blow Samsung's Galaxy out of the water.
Apple stock closed down 0.7% Thursday and Intel stock 0.5%.