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stocks that will be most negatively impacted by the production cuts as Apple will be forced to lower its production

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stocks that will be most negatively impacted by the production cuts as Apple will be forced to lower its production


stocks that will be most negatively impacted by the production cuts


Earlier this week, it was reported that due to the ongoing semiconductor shortage and supply chain issues, Apple will be forced to lower its production of the iPhone 13. While Apple did warn earlier this year that this could occur, it is nonetheless a shock to numerous companies whose profits rely heavily upon sales of the iPhone. 


Today we are going to look at some of the stocks that will be most negatively impacted by the production cuts. 


Stocks to Watch: Cirrus Logic (NASDAQ: CRUS)


Cirrus is most at risk of production cuts, with 80% of its sales coming from Apple. The company developed the high-precision circuits used in the iPhone. The stock is already down ~3% year to date, and Bank of America previously warned in September that its high exposure to Apple was a risk for the stock price. 


Stocks to Watch: AT&T Inc. (NYSE: T)


AT&T stock hit an 11-year low earlier this week and is down ~12% year to date. The company was relying on a surge in 5G phones to renew subscriptions and improve profits. With 80-90% of iPhones sold having 5G, the lack of new 5G phones in the market will directly impact AT&T's bottom line. 


Stocks to Watch: Skyworks Solutions (NASDAQ: SWKS)


This stock was downgraded by Baird Analyst Tristan Gerra and Bank of America Analyst Vivek Arya. Both cite smartphone supply chain issues as the reason for downgrading the stock, but Arya also mentions the high exposure to Apple, with a significant portion of its revenues coming from iPhone sales. Skyworks manufactures chips for use in radio frequency and mobile communications systems.


Stocks to Watch: Qualcomm Inc (NASDAQ: QCOM)


As the primary supplier of chips for the iPhone, the company will be directly impacted by the decreased demand for its products. Qualcomm has been preparing for a future without Apple, with rumors that Apple will be looking to replace Qualcomm chips in the coming years. Nonetheless, this will hurt revenue in the short term. 


Stocks to Watch: Apple (NASDAQ: AAPL)


The iPhone continues to be the flagship product for Apple. Its entire software ecosystem is built around the device, and new generations are an opportunity for significant profits for the company. Decreased production would inevitably hurt Apple's bottom line. Despite this, the long-term outlook for the company should remain strong, given that the production shortage is expected to be a short-term issue. 


Stocks to Watch: Broadcom Inc (NASDAQ: AVGO)


Broadcom has long suffered from high exposure to Apple. In 2016 following a merger, the new Broadcom aimed to decrease its exposure to Apple to 15%-16%. But five years later, the company finds itself with exposure over 20% and Apple decreasing production. Broadcom supplies the radio frequency chips used to connect iPhones to wireless networks. The stock has already been falling this week and may continue to do so in the short term. 


Stocks to Watch: Qorvo Inc  (NASDAQ: QRVO)


Qorvo also works in the wireless connectivity space, supplying numerous individual components used in the iPhone. This stock is already battered, down ~4% year to date, and a decrease in demand for its products would accelerate this decline. The company has more than 20% exposure to Apple but has been moving into the smart home, automotive, and IoT spaces in recent years as it attempts to diversify its income sources. 



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