In response to a warning from Ming-Chi Kuo that Cirrus Logic’s shares fell. Kuo said that Apple will return to classic buttons of its iPhone 15 and not adopt the solid-state model.
It is a significant chance, since Apple is responsible for nearly 90% of the company’s revenues. But, Cirrus can still expand its business by making use of the other avenues that are promising.
Risques within the Supply Chain
Following the report by Ming-Chi Kuo the fact that Apple (NASDAQ.AAPL:AAPL) will not utilize Cirrus Logic’s technology on the coming iPhone Cirrus Logic’s share price fell dramatically. This is especially concerning since Apple is the biggest part of the revenue Cirrus earns.
There is room for expansion that goes beyond the biggest customers. The company’s audio chips are used in a variety of products, including laptops. It is also possible to create other applications for the audio chips like the use of adaptive noise cancelling headphones as well as voice control.
While Cirrus is a promising company however, it’s important to keep in mind the risk to supply chain security can hinder the growth of Cirrus. The threat of theft from chip isn’t limited to China however, it also rises in the absence of oversight or government intervention within U.S. semiconductor production. The policymakers must establish standards to ensure the security of semiconductors for all producers of semiconductors as well as users. This could limit the risk of hacking and protect U.S. hardware’s reputation.
Rely on Apple
Cirrus Logic may see greater than 12 percent decline because of an analyst’s analysis regarding Apple’s (AAPL) forthcoming iPhone 15 series phones. The company is the one that supplies the controller chip used in this phone’s new solid-state buttons.
Ming-Chi Kuowho is an analyst for TF International Securities stated in the letter of April 12 that the design changes made by CirrusLogic will be “particularly negative” since the company anticipated Apple to move away from physical buttons.
AAPL is experiencing low sales of smartphones, however they are expected to start increasing production of the new generation iPhone in the September quarter. This will drive Cirrus the growth of its unit volumes. In preparation for the launch of the new iPhones Cirrus has posted less revenue in the past quarters.
Opportunities for growth in other Markets
The shares fell by 12% following Ming-Chi Kuowho is a well-known tech analyst , expressed concern over Cirrus Logic CRUS shares. Following Kuo declared that Apple is going to eliminate buttons made of solid state in Pro Max and 15 models of the iPhone. iPhone 15 Pro Max and Pro Max models, shares dropped by 12%.
It could result in an increase in demand for the Cirrus Logic chip’s audio and haptic engines. In the fiscal year 2013 eighty percent of its revenue was from Apple which means it’s heavily dependent on Apple.
Christopher Rolland, a Susquehanna analyst, believes that the tight connection with Apple as well as Cirrus Logic has been driving substantial growth, and it is on the rise. Rolland is also convinced that the solid financial position of the business and its absence of longer-term debt and its the policy of repurchases for shares could assist in achieving the positive PE ratio.
Analog and high-precision mixed-signal circuits made by the company are extensively used in commercial and industrial applications. Mobile audio products from the company are sold to the makers of smartphones. The company’s audio products that are not portable as well as other items are geared towards the industries and energy sectors.
Cirrus Logic provides mixed-signal and analog audio DSP integrated Circuit (IC). These chips are used across a variety of markets, such as portable audio devices, tablets computers , smartphones, wireless headphones and home theater systems in addition to commercial and professional applications.
The main lines of business include Audio and High Performance Mixed-Signal. The Audio division produces low-power high-precision audio components to mobile devices as well as the market for consumer electronics.
High-Performance mixed signal is the business which offers a wide range of digital-to-analog converters (DACs, ADCs), as well as other items. They are used across a variety of industries such as energy and automotive.
Apple is the biggest client. It is a major factor in Cirrus Logic’s revenue. Cirrus Logic could see a decrease of iPhone 7 shipments as a consequence of the demise of the headphone connector. It could have an adverse impact on the company’s profits. If customers stop making use of its products, the business could be affected too.