From a note to clients by Cowen’s Karl Ackerman that landed in my inbox Monday morning.
(Acronyms unpacked and basis points converted to percentages for easier reading)
The AAPL supply chain continued to perform well in October with sales growing 6% month over month, 1.5% ahead of seasonal (after advancing 4.5% ahead of seasonal in September).
Of the 21 companies we track on a monthly basis in the AAPL supply chain, the original design manufacturing (ODM) and electronics manufacturing services (EMS) makers performed the best vs. seasonal driven by strength at Wistron (~17% above) who shares the iPhone 8+ with HonHai, Compal (~10% above) who makes the Watch, and Pegatron (~6% above) who supplies the iPhone 8 casing.
Hon Hai, the sole electronics manufacturing services (EMS) maker for the iPhone X, advanced slightly below seasonal (~2% below), but it did post a 2-year record high of monthly sales in October.
Outsourced semiconductor assembly and test (OSAT) provider ASE, who supports AAPL on integrated circuit (IC) packaging and system in package (SiP) solutions, advanced ~3% above seasonal. TSMC also reported their highest monthly sales result in October driven by the continuous ramp of A11 system on a chip (SoC), though results were 2% below 5-yr seasonal. Display, metal casings, camera modules, battery packs and other electronic component players all fell well below seasonal in October.
These data trends are important as our analysis indicates robust predictive power for AAPL sales based on overall AAPL supply chain sales on a quarter over quarter basis. Over the last 9 years, AAPL’s revenues have had an 83% correlation and 70% R2 w/ AAPL’s supply chain sales.
My take: Except for giant Hon Hai (Foxconn), these names are new to me.