Analysts: Synaptics faces Apple insourcing risk

“Following concerns that Apple could displace Imagination Technologies and Dialog Semiconductor with an internal solution, we evaluate the potential risk that other suppliers could be displaced by Apple in the future,” John Vinh and Jun Wang, Pacific Coast Securities, write via Barron’s.

“In our view, the risk of radio-frequency (RF) providers (Broadcom, Qorvo, Skyworks Solutions or Cirrus Logic) being insourced by Apple is medium to low, but Synaptics’ risk is potentially high,” Vinh and Wang write. “Our favorite Apple supply chain names are Broadcom, Cirrus and Skyworks.”

Vinh and Wang write, “We see moderate-to-high risk of Apple looking to insource its display driver integrated circuit (DDIC), given: 1) as we previously noted, Apple has hired a significant number of former Renesas SP (RSP) [supplier of DDICs] engineers; and 2) we believe Apple has been developing its own internal OLED DDIC.”

Read more in the full article here.

MacDailyNews Take: Again, as we wrote yesterday, investing in suppliers who are heavily dependent on Apple’s business is it’s own special thrill ride.

It’s as clear as synthetic sapphire.

SEE ALSO:
Shares in chipmaker Dialog plunge over Apple contract doubts – April 11, 2017
Without Apple, Imagination Technologies’ PowerVR has no future – April 10, 2017
Apple steps up homegrown GPU plans with London hiring spree – April 9, 2017
Why Apple’s ditching of Imagination is critical for the future of the iPhone – and maybe even the Mac – April 5, 2017
Apple aims for more control, less cost as it accelerates in chip design – April 5, 2017
Apple could look to buy Imagination Technologies after ditching the chip firm, share price plunge – April 4, 2017
Imagination Technologies’ shares collapse after Apple dumps UK chip designer – April 3, 2017
Apple nabs top talent from iPhone 7 GPU chipmaker Imagination Technologies – October 13, 2016
After failed takeover talks with Apple, Imagination Technologies sells stake to state-owned Chinese company – May 9, 2016
Apple in ‘advanced talks’ to acquire Imagination Technologies for PowerVR GPU – March 22, 2016

10 Comments

  1. That’s what unbridled free market capitalism should do. Should the gov’t protect Apple’s suppliers from bankruptcy because they were stupid enough to rely on another company for the bulk of its business? Apple can take the risk itself of in-house development of the entire manufacturing process if it wants. This is capitalism at its most glorious.

    1. In my business, about twenty years ago I learned the hard way about becoming overly reliant on just one client. That client ran into business difficulties, meaning that my services were much less in demand. The following year, my income dropped to about 30% of the previous year. I immediately realised the importance of spreading my work between multiple clients so that if one failed for any reason, it wouldn’t have a major impact on my future.

      However I very much support Apple’s position of taking technology in-house wherever possible because Apple chooses the features and the timescale. Apple already tightly integrates the OS with the chips and will gain additional benefits from even tighter integration.

      Many readers will remember how before they adopted Intel, Apple was frustrated by slow development of PPC chips. Motorola simply couldn’t provide the solutions that Apple needed. These days, Apple’s A-series ARM chips are outperforming those of other companies and getting significantly better every year. Meanwhile over in the Microsoft camp, Surface Phone was expected mid 2016, but Intel cancelled the processor that was intended to power it, which means that a redesigned Surface Phone is now unlikely to appear before late 2017 or maybe 2018.

      When giants such as Intel and Motorola let down clients, it’s easy to see why taking responsibility for your own core technology is so appealing for a company which has the resources and business model to make it viable.

      1. That said, this argument shouldn’t be taken to the extreme where some say Apple should replace Intel CPUs in Macs with A-series ones. Abandoning PPC made sense because it was falling behind the curve of the other big players on the market, Intel and AMD. Intel, however, IS the lead for high-performance consumer CPUs, so even if Intel is a year late to releasing their latest chip, *all* of Apple’s PC competitors are affected.

        So, abandoning it for A-series ones only makes sense for entry-level Macs that had also better sell for at least $100 less than current prices.

        1. I do not agree, mossman, A very valid argument can be made for folding Apple’s A-series SoCs into Macs, starting at the low end. As they get more powerful, A-series SoCs may eventually completely displace Intel on Macs. Apple’s A10 SoC is quite powerful and the upcoming A11 manufactured on a 10nm process might very well beat much of Intel’s consumer processor lineup. It is quite reasonable to believe that Apple’s processors will surpass Intel’s processors in the near future. The iPhone enabled this for Apple by creating a market that consumes a couple of hundred million processors per year. That economy of scale supports the continued development of the A-series SoCs and keeps the cost per unit highly competitive with Intel’s offerings. If Apple’s SoC designs support the development of massively parallel configurations – dozens, hundreds, or thousands of cores – then it might eventually make a big impact in the supercomputer space, too. After all, A-series processors are quite efficient on a per-watt basis. They have to be in order to work in portable devices. That has never been a strength of Intel, as their attempt with the Atom CPU proved. Intel has to deal with far too much legacy baggage.

          Intel made great strides in the 2000s, but Intel’s processor evolution has slowed a lot in the current decade. Intel may be the dominant player in computer processors for now, but history has shown that technology dominance can be very fleeting.

          1. I allowed for A-series on low-end Macs as long as there’s a price reduction associated with not paying an “Intel tax”. But losing Intel entirely would instantly mean they’re no longer suited for development work for non-Mac platforms, due to massive performance losses when we can no longer virtualize machines and have to emulate them instead. I currently virtualize both Linux and Windows environments on my MBP.

  2. Seriously, the remarks of “Capitalism Consuming Itself” make no sense. He or she is confused. For example, as OLED’s become available, Apple could hire a contractor to design the DDIC’s (Display Driver Integrated Circuits). That is called “outsourcing”, and some people hate outsourcing. But when Apple hires people to do it in-house, these same people hate that too! Is there nothing that they like? Are they just confused complainers who always find something to fear and hate? Sheesh! Get a life!

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