Will These 3 Suppliers Benefit from the Apple Deal with China Mobile?

Chris Lau, Kapitall: The new deal between Apple and China Mobile could be welcome news for the software company's suppliers.

When Apple (AAPL) announced a multi-year deal to supply phones for China Mobile (CHL), the deal was not only good for Apple shareholders, but for Apple’s suppliers as well. However, with 600 out of the company's 748 suppliers located in Asia, it can be difficult sorting through the list (PDF) for notable stocks on American exchanges that investors could consider.

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OmniVision (OVTI) is one supplier whose shares are struggling to break past the $1 billion market capitalization mark. Still, it managed to rally over 11% on anticipation of the Apple deal in China. OmniVision is also continuing to innovate its products, so its reliance on Apple may not be so substantial in 2014 as investors previously thought. 

The company recently developed a 16-megapixel sensor that can capture ultra-high definition video. The OV16825 chip is already in volume production, and sales of the product should start to show up in future quarters.

Click on the interactive charts below to view data over time. Sourced from Zacks Investment Research.

Cirrus Logic (CRUS) is another supplier of semiconductors that is thought to rely heavily on sales of Apple’s iPhone and iPads. The sale of tens of millions of these devices in China could also boost Cirrus, which supplies both the audio codec and audio amplifier for Apple’s iPad Air. 

One of Forbes' favorite tech companies for 2013, Cirrus continues to produce high quality products. Its financial books are also healthy. Cirrus does not have any debt, though inventory levels increased steadily over the years. This is expected, because the company is taking in larger order volumes.

Another company to watch is NXP Semiconductors (NXPI). Though shares are at a 52-week high, NXP is also building its presence in China. It recently said that it would establish a Chinese automotive semiconductor company. The joint venture is with DAT Telecom Technology. NXP makes NFC (or near field communications) that may be used to support transactions. 

NXP was also recently added to the Nasdaq 100 index on December 16, 2013. So even if the Apple deal with China Mobile doesn't turn out to be as profitable as expected, suppliers like NXP seem to be supported by overall positive sentiments.

 

(Written by Chris Lau, a Kapitall contributor.)

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