KUALA LUMPUR (Feb 7): Shares of Inari Amertron Bhd (KL:INARI) surged as much as 13% on Friday, as investors bet that its key client Broadcom Inc would benefit from higher orders.
Inari hit RM2.75 on Bursa Malaysia, and erased the decline over the past nine days. The stock was the third biggest gainer across the exchange on Friday, up 29 sen to close at RM2.72, after nearly 39 million shares changed hands.
Skyworks Solutions Inc, a competitor of Broadcom, warned on Thursday of a reduced "content position" in the upcoming Apple smartphones.
The Wall Street Journal reported that Skyworks expects its content in Apple's iPhones to decrease by 20% to 25% in the upcoming phone cycle.
Analysts covering US markets speculated that Broadcom could be a potential beneficiary of lower orders for Skyworks.
Broadcom has likely made its way into producing sockets for Apple’s iPhones, according to Benchmark Research analyst Cody Acree. The socket in question, which has been solely sourced from Skyworks since the iPhone 12, has evolved to become highly complex, he wrote in a research note.
The socket's average selling price, estimated to be between US$3 (RM13.30) and US$4 apiece, is "relatively attractive" to suppliers and inevitably invites increased competition, he noted.
“With Apple perceiving minimal performance differences between competitors, the original equipment manufacturer took the unusual step of dual sourcing the part,” he added.
While Inari does not disclose its customers, analysts and investors have long learnt that the company is heavily dependent on Broadcom, which is a key component supplier to Apple. Most assume that a large portion of Inari's Singapore revenue actually comes from Broadcom.
Singapore is Inari’s largest market, accounting for 88% of the group’s revenue for the financial year ended June 30, 2024, followed by China at 6% and Malaysia at 5%.
Meanwhile, Apple was Broadcom's largest customer for its financial year ended Oct 31, 2023, accounting for about 20% of the chip maker's nearly US$7 billion revenue. Broadcom did not disclose whether Apple was still its biggest customer in its latest filings.