Signals of a weakened forecasts for the new iPhone hit Analog Devices (ADI - Get Report) , Broadcom (AVGO - Get Report) , Cirrus Logic (CRUS - Get Report) , InvenSense (INVN) , Qualcomm (QCOM - Get Report) , Qorvo (QRVO - Get Report) , Skyworks Solutions (SWKS - Get Report) , Synaptics (SYNA - Get Report) and Texas Instruments (TXN - Get Report) , Pacific Crest analyst Michael McConnell noted in a quarterly review of mobile device supply chain partners.
Pacific Crest downgraded Cirrus and Skyworks, but InvenSense, Qorvo, Synaptics and others took knocks.
Cirrus generated about 66 percent of its fiscal year 2016 sales from Apple, down from 80 percent in 2014. Samsung (SSNLF) also made up about 15 percent of Cirrus's fiscal year 2016 sales, but no one else tops 10% of the company's sales. McConnell previously set a $40 per share target for Cirrus, but suggested the fair value lies between $33 and $36. Shares dropped $2.32, or 6.1%, to $35.72 on Tuesday afternoon.
"While feedback from Asia increases our confidence that Cirrus Logic stands to be one of the biggest beneficiaries in terms of content in the iPhone 7 related to the transition to digital headsets, we ultimately don't believe this will be enough to offset a 15% to 20% decline in iPhone 7 shipments in [in the second half of 2016]," the analyst wrote.
Skyworks, meanwhile, has exposure to Apple supplier Foxconn Technology. Foxconn and "other suppliers" to an anonymous "large OEM" that develops "smartphones, tablets, routers, desktop and notebook computers" made up more than ten percent of fiscal year 2015 net sales, the company said in its annual report. While McConnell formerly targeted $90 for Skyworks, he wrote that fair value is $60 to $67 per share. Skyworks dropped $3.77, or 6%, to $58.84 on Tuesday.
InvenSense made 40% of its fiscal year 2016 net revenue from Apple, versus 16% from Samsung. The company's exposure to the two mobile phone giants is moving in different directions, with exposure to Apple rising and that to Samsung falling. In fiscal year 2015, Apple accounted for 30% of net revenue and Samsung accounted for 28% of net revenue. McConnell sees fair value of $6 per share for InvenSense, which dropped 37.5 cents, or 6.1%, to $5.75 Tuesday.
Strong performance for the iPhone SE will help Qorvo, McConnell suggested, but won't make up for the hit from the iPhone 7. Qorvo fell $3.33, or 6.1%, to $51.18, within McConnell range of $50 to $55 in fair value.
In addition to slower volume in the iPhone7, McConnell wrote, Synaptics must contend with an inventory correction in the iPhone 6s and other issues. The analyst values the stock at $49 to $54. Synaptics dropped $2.18, or 4.2%, $50.25.
There are some bright spots, however. Cambridge, England, ARM (ARMH) has the apparent double whammy of exposure to both Apple and Brexit. But a weakened British pound should help. "We note that every 10% decline in the pound to the dollar bolsters company net profits by over 6%," McConnell wrote.
Foreign exchange winds didn't push ARM higher on Tuesday, though. The stock dropped 48 cents, or about 1%, to $44.61.