This chip firm’s reliance on Apple is a risk factor, analyst warns

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Semiconductor firms that supply Apple with chips for iPhones, iPads and Macs might sound like a safe bet for investors but they also come with an element of risk, according to one analyst who follows the sector.

UBS’s Francois-Xavier Bouvignies told CNBC Wednesday that his firm has a “neutral” rating on French-Italian chip firm STMicroelectronics because of the company’s exposure to smartphones and Apple in particular.

Work with smartphone firms account for 30% of STMicroelectronics total revenues, and the company has 25% exposure to Apple, Bouvignies said.

“For us, it’s kind of a risk to have such exposure to one customer, which is always difficult to predict,” Bouvignies said.

Apple and STMicroelectronics did not immediately respond to a CNBC request for comment.

Apple has been bringing an increasing amount of chip development in-house over the last few years, hurting smaller players in the process.

The Cupertino-based company decided to cut ties with British chip designer Imagination Technologies in 2017 to develop processing units for the iPhone and iPad in-house.

That news sent the once-listed firm’s shares tumbling as much as 71%, due to concerns it would heavily impact its future. And it did. Imagination Technologies was subsequently sold to China-backed private equity buyer Canyon Bridge Capital Partners for £550 million ($727 million).

Apple and Imagination Technologies announced a new relationship in Jan. 2020.

A safer bet?



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