Becoming a supplier to tech giant Apple (AAPL) - Get Report is a huge win for a company -- but it also comes with big risks, as Imagination Technologies (IGNMF) learned on Monday when its shares plummeted more than 60% after announcing that Apple would stop using its graphics technology for its iPhones, iPads and Apple Watches.
Apple warned Imagination Tech that it was going to develop its own graphics technology and thus would no longer need its services within 15 months to two years. Previously, Apple had accounted for about half of Imagination Technology's revenue. On Tuesday, shares were rebounding slightly, with the stock up 5.1% to $1.45.
"The biggest risk to Imagination's business model was realized this morning," analysts at Investec told Reuters. "The loss of this revenue stream will have a material impact on the financials of the company."
In 2016, Apple spent about $50 billion at US-based suppliers, CEO Tim Cook said at an annual shareholder meeting in February. "We're always looking for more ways to help our country," Cook said. "We know that Apple can only exist in the US." His comments came as the new administration has been firm that it wants to keep jobs in the U.S.
Apple published a list of its top 200 suppliers on its website in February and noted that the companies on the list accounted for at least 97% of its procurement expenditures for materials, manufacturing and assembly of its products worldwide in 2016.
Previously, Apple has dropped Portal Player, Sigmatel, CSR and Wolfson from its supply chains, dealing major blows to their businesses. To see which other companies' fortunes are most tied to Apple, TheStreet has put together this slideshow of the ten public companies that get the highest percentage of their revenue from Apple, according to data collected by FactSet.
Editor's pick: This article was originally published on April 3.