Stronger Apple (AAPL) iPhone Builds a Tailwind for Broadcom (AVGO), Skyworks (SWKS) and Qorvo (QRVO) - Cowen

December 4, 2017 4:49 PM

Cowen analyst Karl Ackerman said their field work indicates better than expected Apple (NASDAQ: AAPL) iPhone builds for CQ4:17/CQ1:18 that should provide near term tailwinds for Broadcom (NASDAQ: AVGO), Skyworks Solutions (NASDAQ: SWKS) and Qorvo (NASDAQ: QRVO).

The firm's field work in Asia last week indicated builds for the iPhone X remain at 41MM for CQ4 with total iPhone shipments of 82MM, unchanged from last month and roughly 4MM units above what they think is implied by Street expectations for the AAPL supply chain.

They now have their first read on CQ1:18 iPhone build expectations, and their field work indicates builds of 62MM, or 2MM above what they think is implied by Street.

"This brings unit supply down 25% Q/Q, better than last year’s CQ1:17 down 32% Q/Q and CQ1:16 down 43% Q/Q," Ackerman commented. "From a mix perspective, iPhone X should decline to 36MM units in CQ1:18, or largely in line with typical seasonality of the newest model after launch. Figures 5 and 6 plot adjustments to our estimates of supply over time for each quarter going back to CQ1:15."

Ackerman notes China smartphone demand also remains healthy as Huawei smartphone builds continue to move higher vs. previous expectations.

They see results positive for AVGO’s earnings on 12/6 AMC.

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