Evercore ISI believes any iPhone supply issues for Apple would be transitory
Shares of Skyworks Solutions (SWKS) are under pressure on Wednesday after Baird analyst Tristan Gerra downgraded the stock to Neutral as he expects a “secular slowdown” in radio frequency content growth in high-end smartphones. Meanwhile, Apple (AAPL) is said to be planning to cut its projected iPhone 13 production targets for 2021 by as many as 10M units as shortages are impacting several areas within the supply chain. Bank of America analyst Vivek Arya estimates that the iPhone maker accounts for 35%-40% of the mobile RF chip market given its premium-tier portfolio, and identifies Skyworks, Cirrus Logic (CRUS), Qorvo (QRVO) and Broadcom as companies with “high” Apple exposure.
‘SECULAR SLOWDOWN’ IN RF CONTENT: Baird analyst Tristan Gerra downgraded Skyworks Solutions to Neutral from Outperform with a price target of $165, down from $220. The analyst expects a “secular slowdown” in radio frequency content growth in high-end smartphones, from 30% last year to 10% this year and lower in outer years. Further, he argued that Skyworks’ market share “appears to be stabilizing going forward following significant share gains in past few years.”
Gerra added that worsening component constraints are compounding on earlier-year shortages and are now negatively impacting the iPhone13 procurement ramp. The analyst had conveyed datapoints early this year about component shortages potentially impacting iPhone production for the second quarter. Given further extensions in component lead times since then, the inventory replenishment he thought would drive an estimated 83M-86M procurement units for the iPhone 13 this year has been since very recently revised down throughout the supply chain, compounding earlier-year issues.
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