Should you invest in iPhone's component suppliers?

Posted Jun 30th 2007 3:00PM by Peter Cohan
Filed under: Products and Services, Apple Inc (AAPL), iPhone

There may be a chance for investors to profit from investing in Apple, Inc.'s (NASDAQ: AAPL) iPhone component suppliers. ifixit has kindly disassembled an iPhone and identified the following components:

Skyworks Solutions, Inc.'s (NASDAQ: SWKS) GSM/Edge Power amplifier (SKY77340)
ARM 339S0030 (which ifixit thinks might be a Baseband processor)
Samsung Electronics Co. Ltd.'s flash memory chip. According to ifixit, BG means 32 Gigabits, the 1 means double that, so that's 64 Gigabits of storage, or 8 Gigabytes. (K9HBG08U1M)

I am not sure which company makes the ARM, however, Skyworks might be worth looking at. Skyworks generated $766 million in revenues and lost $69 million in the last year. It trades at a forward PEG of 0.9 -- with a P/E of 19.6 and EPS growth of 21.9% to $0.46 in 2008.

In the first quarter of 2007, Samsung generated revenues of $15.5 billion and net income of $1.7 billion. Since I do not have earnings estimates I could not reach a conclusion on whether its stock is reasonably priced.

However, since it's a small company I would guess that Skyworks is more likely to benefit from its sales of iPhone components than Samsung.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.

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Reader Comments (Page 1 of 1)

6-30-2007 @ 6:13PM

jose said...

of course you should it is a great time to do this! Cuz Apple invests a lot on them!~ I see that there are a lot of people in Taiwan earning a lot with the investment of the suppliers!~