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Four Apple suppliers to watch as iPhone 6 launch approaches

Chris Lau, Kapitall: AAPL isn't the only play to take advantage of the iPhone 6. These Apple suppliers are worth a look too.

Rumors of an iPhone 6 are heating up again. While this may move Apple (AAPL) shares, investors should focus more on GT Advanced Technologies Inc., (GTAT) and Corning (GLW). GT Advanced could continue to take off if sapphire is used in screens for Apple devices.

Sapphire furnaces

Plants built in Arizona, dubbed “Project Cascade,” could be purposed for sapphire production at a large scale. This would bode well for GT Advanced Technologies. Investors already bid shares up by four-fold in the last year, but revenue growth from a deal with Apple will support more upside. The sapphire maker forecast 2014 revenue of up to $800 million. This is up from $299 million in revenue in 2013. GT will take a hit in gross margin, down to 25% – 27% from 31.1%.

Downside for Corning

Corning shareholders are so far ignoring sapphire as a threat to Gorilla Glass. Corning has other sources of revenue, notably in television screens. Still, losing sales to Apple would be a negative for Corning.

Corning, whose share price is now above $20, must rely more on TV sales for earnings growth. Until the replacement cycle in TVs is renewed, earnings growth will not be as rapid as investors would like.

Sapphire used in LEDs

Sapphire itself has other uses. LEDs, which use a sapphire substrate, could drop in price if sapphire prices drop. This would benefit LED players. Cree (CREE) and Universal Display (OLED) come to mind.

Do you think Apple's new screen will disrupt LED makers? Use the list below to start your own research.

Click on the interactive chart to view data over time. 

1. Apple Inc. (AAPL): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $472.72B, most recent closing price at $527.55.

 

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