I’m in the process of researching the companies listed as key suppliers by Apple in the 10K in hopes of finding a few new investment ideas.  My thought process; if they are critical to Apple and they provide key components, then they have a chance to prosper with Apple and if their Apple business is a major portion of their earning then they could experience outsized growth. Anyway I will split this into several posts since the list of suppliers is quite large.  One thing I look at is who fell off the list and why and who replaced them for the component.  This process involves a bunch of guesswork since Apple never reveals much except with the major suppliers but I do follow all the teardowns so have a pretty good idea of what is inside Apple’s products. 

The 2008 list
The Company believes there are several component suppliers and manufacturing vendors whose loss to the Company could have a material adverse effect upon the Company’s business and financial condition. At this time, such vendors include, without limitation, Amperex Technology Limited, ASUSTeK Corporation, ATI Technologies, Inc., Atheros Communications Inc., AU Optronics Corporation, Broadcom Corporation, Chi Mei Optoelectronics Corporation, Cypress Semiconductor Corporation, Hitachi Global Storage Technologies, Hon Hai Precision Industry Co., Ltd., Infineon Technologies AG, Intel Corporation, Inventec Appliances Corporation, LG Display, LSI Corporation, Matsushita, Murata Manufacturing Co., Ltd., National Semiconductor Corporation, NVIDIA Corp., Inc., Quanta Computer, Inc., Renesas Semiconductor Co. Ltd., Samsung Electronics, Sony Corporation, Synaptics, Inc., Texas Instruments, and Toshiba Corporation.

The 2009 list
These include: 3M Co., Advanced Micro Devices Inc., AKM Semiconductor Inc., Amkor Technology Inc., Analog Devices Inc., Aptina Imaging Corp., ARM Holdings PLC., Atheros Communications Inc., Atmel Corp., AU Optronics Corp., Avago Technologies Ltd.,Broadcom Corp., Cirrus Logic Inc., Corning Inc., Cypress Semiconductor Corp., Dover Corp., Flextronics Inc., Foxconn Technology Co. Ltd., Hon Hai Precision Industry Co. Ltd., Imagination Technologies Group PLC., Infineon Technologies AG, Intel Corp., Inventec Appliances Corp., LG Display Co. Ltd., Linear Technology Corp., MagnaChip Semiconductor Corp., Maxim Integrated Products Inc., Mitsumi Electric Co. Ltd., Murata Mfg. Co. Ltd., National Semiconductor Corp., Nichia Corp., NVIDIA Corp., NXP B.V., OmniVision Technologies Inc., Quanta Computer, Inc., Pegatron Corp., Philips Lumileds Lighting Co., Renesas Semiconductor Co. Ltd., RF Micro Devices Inc., ROHM Co. Ltd., Samsung Electronics Co. Ltd., Skyworks Solutions Inc., STMicroelectronics NV, Sumitomo Chemical Co. Ltd., Texas Instruments Inc., Toshiba Corp., Toyoda Gosei Co. Ltd., and TriQuint Semiconductor Inc.

One of the first companies which caught my attention which fell off the list was Synaptics, Inc.  They were the supplier of the touchscreen controller for the Iphone/Itouch.  Since this is a critical component of the future who will supply it in the future.

From my research Amtel is the lucky supplier

Touchscreen

The Atmel® maXTouch™ family of touchscreen controllers offer superior performance and low power consumption in a single IC. The maXTouch devices support an unlimited number of touches which greatly enhances the user experience and changes the way users interact with electronic products. Built in gestures and the ability to ignore unintentional touches result in a user interface that is intuitive and
reliable.

The mXT224 is the first capacitive touchscreen solution able to support not just finger touch but also stylus, fingernails and gloves for drawing or signature capture and character recognition, thanks to its 80:1 signal-to-noise ratio (SNR) and extremely fast refresh rate. A high SNR is critical for the accurate reporting of adjacent or weak signals, and allows for precise reporting in noisy environments such as products with noise coupled from radio transceivers, LCD displays and battery chargers. Solutions without a suitably high SNR consume more power and decrease their response time with extra filtering and processing in an attempt to extract a weak signal from a high noise environment. In contrast, the nearest competing off-the-shelf touchscreen solution has half as many nodes as the mXT224, a screen refresh rate of only 83 Hz (66% slower) and an SNR of only 25:1 (66% less). In addition to offering the best SNR rates in the market, maXTouch offers advanced noise suppression algorithms to provide end products with the ultimate immunity against coupled noise issues.

The other possible supplier is Avagotech

Avago’s new capacitive touch panel controller is currently shipping to one of the world’s leading portable media player manufacturers and receiving excellent industry reviews for its multi-touch performance. 

pats, thank you for this list. It may be useful for a number of our members. 

I’m fixed on one major services provider: AT&T.

The company is prospering from the success of the iPhone, pays a rich dividend and has the success masked for now by the huge subsidies paid to Apple. It’s not an equity that excites one to watch its daily share price movements but may be attractive for those seeking a more conservative component of an investment strategy offering attractive current income and the opportunity for equity price appreciation as iPhone sales continue to grow in the States.

It’s currently out of favor on the Street.

FWIW, I tried that with five or six subcontractors to AAPL over the past three years.

All failed to make enough profit to cause any substantial stock appreciation, EVER.

Apparently, AAPL drives such a hard bargain, all these guys get is increased capacity, and that never seems to equate to increased profits.

Seriously, put the money into AAPL, where the money seems to end up anyway, it certainly doesn’t stick to the subs.

Atheros Communications Inc.,

AU Optronics Corp.,

Broadcom Corp.,

Foxconn Technology Co. Ltd., Hon Hai Precision Industry Co. Ltd.,

Imagination Technologies Group PLC.,

Infineon Technologies AG,

Quanta Computer, Inc.,

Chi Mei Optoelectronics Corporation is off the list.  They provided camera modules.
The new suppliers

Aptina Imaging Corp

Aptina, a subsidiary of Micron Technology, Inc., is a global provider of complementary metal–oxide–semiconductor (CMOS) imaging solutions with a growing portfolio of products that can be found in all the leading mobile phone and notebook computer brands.

OmniVision Technologies Inc

We know they are using a OmniVision module in Iphone 3GS.  My guess is they are also supplying the module for the Nano.

The OV7675 is a high performance VGA sensor designed specifically to address growing demand for consumer electronics from emerging markets. Its small optical format enables ultra-thin camera modules, which, combined with its excellent low-light performance, make it a very attractive solution for entry-level and mainstream mobile phones, notebooks, netbooks and webcams.

TanToday - 02 November 2009 08:34 AM

FWIW, I tried that with five or six subcontractors to AAPL over the past three years.

All failed to make enough profit to cause any substantial stock appreciation, EVER.

Apparently, AAPL drives such a hard bargain, all these guys get is increased capacity, and that never seems to equate to increased profits.

Seriously, put the money into AAPL, where the money seems to end up anyway, it certainly doesn’t stick to the subs.

Atheros Communications Inc.,

AU Optronics Corp.,

Broadcom Corp.,

Foxconn Technology Co. Ltd., Hon Hai Precision Industry Co. Ltd.,

Imagination Technologies Group PLC.,

Infineon Technologies AG,

Quanta Computer, Inc.,

I would agree to a point, but it also depends on what they provide to Apple and what percentage of their business is with Apple for a smaller company it can make a huge difference.  For a company like Intel, a company like Apple keeps their high end CPU business going strong since they are the primary seller of CPUs at the high end everyone else is selling Atom or Pentium at the low end.  My focus is more on the the companies engineering somewhat unique parts which are not available elsewhere.  The research also help me understand where Apple might go next from an engineering perspective.  Apple does not create all the technology and most companies are much more open about product roadmaps then Apple so if you what an idea where Apple is going, you need to look at what key suppliers can deliver.  Most engineers will look for solutions within their existing supplier base before going to find a new supplier.  Getting dropped can definitely have a impact on the supplier.  For example the Apple business for the synaptic touchscreen was material to synaptic and if Apple dropped them then they are probably not some combination of price/product competitive.  Another company which jumps out as an investable idea on the short side is Nvidia.  If you look at the most recent Imac the Nvidia GPU has been replaced by ATI and the Integrated GPU/Chipset the 9400M will go the way of the dinosaur when Intel transitions to Arrandale for mobile in the Spring of 2010.  The question then becomes does Nvidia have any new business coming on line?

Rohm has some interesting ICs which should be in future Iphones/Itouch.

ROHM offers a lineup of LED drivers designed to drive 2-6 lamps for backlighting in compact LCDs ranging from 1.8 to 4.0 inches. The ultra-compact CSP (Chip Scale Package) and 1-wire design contributes to end-product miniaturization while simplifying the wiring pattern.

Minimizing LCD backlight power in mobile phones is becoming an increasingly important consideration, especially given the continual progression towards greater functionality. Many devices now implement some type of brightness control, normally by utilizing a microcontroller and LED driver along with an ambient light sensor.

ROHM Co., Ltd. has recently announced the development of the industry’s first monolithic optical proximity/illumination sensor that supports touchless motion detection.

ROHM LED driver ICs are specifically designed to provide optimized viewing with low power consumption in LCD displays. In addition, a special double dimming function adjusts the brightness based not only on ambient conditions, but on image content as well for maximum efficiency and visibility with less eye strain than ever before.

Interesting article in EE Times   Which features a couple of Apple’s key suppliers.

STMicroelectronics NV (Geneva, Switzerland), provided details on ST’s decision to build its next-generation HDTV consumer device around the high-performance ARM architecture.
The flexibility, software ecosystem, processing performances and power consumption efficiencies of ARM Cortex-A9 multicore processor were determinant in ST’s licensing choice for its next-generation set-top-box and digital TV system-on-chip (SoC) ICs, said Remon

I don’t think Apple would be buying this IC but rather creating it in-house using PA SEMI but some of the comments also apply to Apple.

He declared: “We have more and more connected platforms where we run new services that were not driven in the past especially in the TV. The TV was pure broadcasting four years ago then we started to add IPTV in it. Now, we are starting to add full open Internet services. Clearly, this is changing the picture in terms of processing performances. Intel has seen that, and we have seen that as well. We have already pushed performances and multiplied by a factor three the CPU performance.”

Asked if ST had considered adopting Intel Atom, often tipped as a rival to Cortex-A9, Remont replied negatively and noted that “from the value benchmark we have done, it is clear that the Cortex-A9 is superior to Intel Atom in terms of processing performances and power consumption efficiency.”

“We see not the devices themselves converging but clearly the services that you run on devices such as TVs, mobile phones or even in automotive. What we have announced here on the TV and STB goes in this direction, enabling more convergence between various types of devices and leveraging the software ecosystem that you may have between these devices.”

“Connected devices and the way it will change the life for everybody is what we want to push, and ARM is instrumental in this direction,” he commented.

The second direction is green products with a benefit for the customer in terms of reliability, cost and brand name, he said.