The explosion of Apple AI has triggered a chain reaction that has reached the Supply Chain! Can we still chase these Apple concept stocks?

Apple Smart Program Ignites Concept Stock Frenzy

In June 2024, after Apple announced “Apple Intelligence,” the entire supply chain took off. Just this one move caused Apple’s stock price to rise nearly 20%, peaking at $230, significantly outpacing the market's 4% increase. Even more striking, a slew of Apple-related stocks also surged—Broadcom (AVGO) rose 15%, and Quanta Computer briefly jumped over 20%. What does this indicate? As long as Apple has new developments, the financial outlook for the entire industry chain changes.

What exactly are Apple concept stocks? Why are they so important?

In simple terms, Apple concept stocks are publicly traded companies that rely on Apple. These companies supply components, manufacture products, and provide services for Apple, and Apple’s sales figures directly determine their revenue. Apple publishes a list of the top 200 global suppliers every year, and making it onto the list can boost stock prices, while being removed can lead to immediate price cuts. For example, when ZhiShen was removed in 2022, its stock price dropped directly by 5%; the same year, TSMC faced order cuts, with stock prices dropping by 5-6%. This is the essence of Apple concept stocks — relying on Apple’s fortunes.

Supply Chain Reshuffle, Who Comes In and Who Goes Out?

On the latest list for April 2024, Taiwan has 49 manufacturers shortlisted. Some are happy while others are worried: the return of Nandeng and the first selection of Jinjian are good news; however, Lianying, which just entered last year, was eliminated after only one year, and Nanya Technology and Jiazhe were also kicked out. This kind of change seems unpredictable, but it actually reflects Apple's stringent requirements for suppliers—if efficiency is lacking and costs are not competitive, they can only be sidelined.

Apple Stock Price Trends = A Barometer for Apple-related Stocks

Data speaks: A quarter of TSMC's orders come from Apple, and about 20% from Broadcom. The stock price trends of these two companies are highly similar to that of Apple. When Apple rises, they almost certainly follow; when Apple falls, they also have to suffer. The higher the supply proportion, the more volatile it is.

Which US-listed Apple concept stocks are worth paying attention to?

Broadcom (AVGO): Specializes in chips for wireless charging and RF front ends, with revenue growth of 43% in 2024 reaching $12.487 billion, and a solid gross margin. Wall Street is generally optimistic about its position in the AI hardware wave. It rose 105% in 2023 and has already increased by 48% this year.

TSMC (Taiwan Semiconductor Manufacturing Company): The foundry for Apple's A-series chips, with a revenue increase of 40.1% year-on-year in Q2 2024 and a net profit increase of 36.3%. The HPC business has surpassed mobile phones to become the core of revenue, with high expectations for the third quarter. This year's increase has reached 68%.

Texas Instruments (TXN): Provides touchscreen control and battery management chips. Although it faced inventory destocking pressure in the first half of the year (Q2 decreased by 15.6% year-on-year), inventory has returned to normal, and a rebound is expected in the second half of the year, with an increase of 18% this year.

Qualcomm (QCOM): The leader in smartphone chips, with Q3 revenue of $9.39 billion exceeding expectations, a year-on-year increase of 11%, and a net profit growth of 26%. The performance guidance is strong, suggesting a recovery in the smartphone market, with a year-on-year growth rate of 20%.

Analog Devices (ADI) and Skyworks Solutions (SWKS): Both provide analog signal processing and RF front-end solutions, with good multi-domain applications (5G, automotive, Internet of Things), showing relatively stable growth.

How to choose Taiwan's Apple concept stocks?

In addition to TSMC in the Taiwan stock market, ASE Technology (3711) has just received new orders for the iPhone 16, with Q2 gross margin reaching a six-quarter high; Delta Electronics (2308), a power supply provider, saw its Q2 gross margin soar to a new high of 34%, rising over 30% this year; Hon Hai (2317) has increased by 75% this year and remains popular as a major assembler; Quanta Computer (2382) has risen by 30% this year. These are all relatively stable choices.

How to Invest? Three Paths

1. ETF Lazy Method: Buy semiconductor ETFs (SOXX, SMH) to cover all Apple-related stocks at once, diversifying risk.

2. Stock Selection Method: Directly open an account to buy Taiwan stocks, while US stocks can be purchased through domestic brokers using a delegated commission or via US brokers (note that financing rates are high).

3. CFD Leverage Method: Buying individual stocks through contracts for difference with no transaction fees, supporting high leverage (up to 200 times), high capital utilization, but also with great risks. For example, with Broadcom, only $88 is needed to buy one lot with 10 times leverage.

Candidly Discussing Risks

Apple-related stocks may seem glamorous, but they essentially rely on Apple's business. Once Apple cuts orders, reduces prices, or supports a second supplier, these companies' revenues are directly impacted, and their stock prices inevitably suffer. Additionally, the chip industry is inherently cyclical, making the destocking period especially tough. Therefore, it is important to understand before investing: this is not an independently growing business, but rather a business trapped by Apple.

Bottom Line: Apple's AI project has indeed opened up a realm of possibilities, but not all Apple-related stocks will benefit from it. Core suppliers like TSMC and Broadcom are relatively safe; smaller companies carry much greater risks. Doing your homework and choosing the right companies is more important than following trends.