Apple Concept Stock Investment Guide: List of Supply Chain Companies and Stock Selection Strategies

Why Should You Pay Attention to Apple Concept Stocks? Apple’s Smart Push Drives a New Wave of Market Trends

In June 2024, Apple officially launched “Apple Intelligence,” a generative AI project, announcing the integration of ChatGPT into iOS systems. This move immediately ignited market enthusiasm. Apple’s stock price surged nearly 20%, reaching a high of $230 per share, far exceeding the 4% increase of the S&P 500 during the same period. More notably, the entire industry chain related to Apple also started to dance—stocks of major suppliers like Broadcom, TSMC, Qualcomm, and others all showed significant gains.

The logic behind this phenomenon is simple: Apple concept stocks refer to listed companies with business ties to Apple, including chip suppliers, manufacturers, and contract factories. The revenue and profits of these companies are directly affected by Apple’s product sales performance, and their stock price fluctuations are often closely related to Apple.

The Value Source of Apple Concept Stocks: The Power of the Supply Chain List

Apple publishes a list of the top 200 global suppliers every year, and changes in this list directly impact the stock prices of related companies. Being included is a positive signal; being excluded is negative.

For example, the latest list published in April 2024 includes 49 factories from Taiwan, with Nan Ya Plastics returning to the list and Gold Arrow Printing being newly selected, while companies like Novatek, Nanya Technology, and Chia Ze, which were on the list last year, have been removed. Historical experience shows that when Zhi Sheng is removed, its stock price drops by about 5% instantly; when TSMC’s orders are cut, its stock price drops significantly. These reflect the market’s extreme sensitivity to Apple’s order volume.

The fundamental logic behind changes in the supply chain list is: Apple’s order volume to suppliers determines the revenue ceiling of these companies. More orders mean higher stock prices; fewer orders lead to declines. This makes Apple concept stocks an important window into Apple’s business health.

How Do Apple’s Stock Price Fluctuations Drive Apple Concept Stocks?

Generally, when Apple’s stock price rises, Apple concept stocks follow suit; when Apple’s stock price falls, they tend to decline as well. However, the degree of this linkage depends on the proportion of Apple’s orders in each company’s revenue.

TSMC and Apple have about a quarter of their orders linked, Broadcom about 20%. From recent trend charts, it’s clear that the stock prices of these two companies are highly correlated with Apple, almost moving in perfect sync. Conversely, companies with a smaller proportion of Apple orders have more independent stock price movements.

Therefore, the primary consideration when investing in Apple concept stocks is the dependency on Apple orders. This directly determines the strength of the stock’s correlation with Apple.

What Risks Should You Be Aware of in Apple Concept Stocks?

The biggest risk in investing in Apple concept stocks is over-reliance on Apple. If Apple experiences the following situations, related concept stocks will face setbacks:

• Order cuts or price reductions by Apple: Demanding lower prices or reducing order volumes directly compresses suppliers’ profits.
• Apple supporting a second supplier: To reduce costs or mitigate risks, Apple may support multiple suppliers simultaneously, diluting orders for individual suppliers.
• Poor sales of new Apple products: Declines in sales of flagship products like iPhone and iPad directly drag down the entire supply chain.

This is why, although Apple concept stocks have growth potential, their risk concentration is also high.

Opportunities in US-listed Apple Concept Stocks: Six Key Stocks Compared

Based on the latest financial reports and market performance, the following US-listed Apple concept stocks are worth close attention:

Broadcom (AVGO): Winner in the AI Chip Wave

Broadcom supplies wireless communication chips and RF front-end components for Apple’s entire iPhone lineup. After a 105% surge in 2023, its stock has gained 48% so far in 2024.

In Q2, the company reported revenue of $12.487 billion, up 43% year-over-year, with an adjusted EPS of $10.96, both exceeding expectations. Wall Street analysts are optimistic about Broadcom’s benefits from the AI hardware boom, and the company has raised its full-year revenue guidance to $51 billion.

TSMC (TSM): The Core of the Supply Chain

As the sole foundry for Apple chips, TSMC’s position in Apple concept stocks is irreplaceable. In Q2 2024, revenue increased by 40.1% YoY, net profit grew by 36.3%, with key financial indicators both rising.

Looking at revenue structure, HPC (High-Performance Computing) has replaced mobile phones as the main revenue engine, with a 28% quarter-over-quarter increase in HPC business in Q2. Management expects that in Q3, strong demand for mobile and AI-related products will continue to support performance.

Qualcomm (QCOM): Signal of Smartphone Chip Rebound

As of June 23, in Q3, Qualcomm’s revenue reached $9.39 billion, exceeding analyst expectations; net profit was $2.648 billion, up 26% YoY; EPS was $2.33. After the earnings release, the stock rose nearly 7% after hours.

In 2024, Qualcomm’s stock has entered an upward channel, with nearly 20% gain since the beginning of the year, reflecting a bottoming rebound in the smartphone market.

Texas Instruments (TXN): Recovery Opportunity After Inventory Adjustment

Texas Instruments focuses on analog chips such as touch control and battery management. Over the past year, industry inventory pressures caused revenue to decline, but in Q2, revenue increased 4.4% QoQ, though still down 15.6% YoY.

However, positive signals include the normalization of inventory levels in the analog chip industry and faster turnover. Since 2024, TXN has gained nearly 18%, reflecting market expectations of recovery.

Analog Devices (ADI): Steady Growth in Analog Chips

ADI supplies analog and signal processing technology to Apple, achieving revenue growth for 13 consecutive quarters, with Q2 2023 EPS up 18% YoY.

The company’s diversified advantages are clear, with involvement in automotive, industrial, and communications sectors, reducing dependence on a single market. The three-year return is 62%.

Skyworks (SWKS): Opportunities in 5G and Automotive Markets

Skyworks provides RF front-end solutions for Apple. After a recent rise and fall, it rebounded at the end of 2022, with a 25% increase since 2023. Its RF technology is applied in 5G, IoT, automotive, and other fields, and is expected to benefit from the rapid development of electric vehicles.

Overview of Taiwan Stock Apple Concept Stocks

Besides TSMC, several other Taiwan stocks are worth attention:

Hon Hai Group (2317): Apple Dependency of the Leading Contract Manufacturer

Hon Hai, as Apple’s leading contract manufacturer, has performed remarkably this year, with a 75% increase since the start of the year. Its main revenue comes from manufacturing iPhone, iPad, and other Apple products, so Apple’s sales performance directly impacts Hon Hai’s results.

TSMC (2330): Core Chip Manufacturer

In Q2, TSMC’s revenue reached NT$673.51 billion, up 40.1% YoY, with net profit up 36.3%. HPC has become the main revenue driver, with a 28% QoQ increase. The company is confident about strong demand for mobile and AI products in the second half of the year, with a 63% increase since the beginning of the year.

Delta Electronics (2308): Power Solutions Provider

As a supplier of Apple power adapters, Delta Electronics reported Q2 revenue of NT$103.44 billion, with gross margin soaring to a new high of 34%, and net profit after tax of NT$9.948 billion, up 72.6% QoQ. The company expects the third quarter to enter peak season, with better performance than Q2. Its stock has risen over 30% since the start of the year.

ASE Technology (3711): New Orders for System-Level Packaging

ASE’s deepening cooperation with Apple includes winning the exclusive order for iPhone 16 series capacitive key SiP modules announced in April. In Q2, gross margin reached 16.4%, a six-quarter high, with net profit after tax of NT$7.783 billion, up 37% QoQ. The company is optimistic about the market outlook for the second half, expecting continued strong growth in AI and HPC fields.

Quanta (2382): Notebook OEM

Quanta manufactures notebooks such as MacBook for Apple, with a 30% increase since early last year. The company benefits from demand growth driven by Apple’s product innovation and AI application upgrades.

How Should Ordinary Investors Layout in Apple Concept Stocks?

Option 1: Achieve Diversification via Semiconductor ETFs

Many Apple concept stocks belong to the semiconductor sector. Investing in semiconductor ETFs can cover most target companies. Mainstream options include:

iShares Semiconductor ETF (SOXX)

• Top five holdings: NVDA 8.57%, AVGO 8.14%, AMD 7.16%, INTC 6.27%, TXN 6.09%

VanEck Semiconductor ETF (SMH)

• Top five holdings: NVDA 10.77%, AVGO 10.44%, ASML 9.74%, TSM 9.60%, AMD 7.68%

Investing through ETFs offers risk diversification but lacks targeted selection, exposing investors to the entire semiconductor sector’s volatility.

Option 2: Individual Stock Trading via Brokers

You can directly open accounts with domestic brokers to buy Taiwan-listed Apple concept stocks. For US stocks, you can use brokerage cross-trading or US-based brokers, but be aware that US stock margin rates are relatively high, increasing costs.

Option 3: Leverage Trading via CFDs

Contracts for Difference (CFD) offer a lower-cost way to trade individual stocks. Compared to brokers, CFD trading of US stocks incurs no commission, and leverage can reach up to 200 times.

For example, with Broadcom (AVGO), using 10x leverage, you only need $88 to buy one lot, greatly reducing trading costs. But remember, higher leverage means higher risk, and profits can be amplified accordingly.

What Is the Core Logic for Choosing Apple Concept Stocks?

Before investing in Apple concept stocks, you must consider three questions:

1. How high is the company’s dependence on Apple’s orders?

This is the most critical question. The higher the order dependence, the greater the impact of Apple’s stock fluctuations on the company, but the potential upside is also larger. TSMC and Broadcom are both highly dependent, so their stock prices are highly synchronized with Apple.

2. Is the company’s position in the industry chain replaceable?

A non-replaceable position means stable order flow. TSMC, as Apple’s sole chip foundry, has an unshakable position. But if Apple develops a second supplier to cut costs, that company’s orders may be diluted.

3. How diversified is the company itself?

Over-reliance on a single customer carries high risk. Analog Devices (ADI) is involved in automotive, industrial, and communication fields, reducing dependence on Apple orders. Skyworks’ RF technology is widely used in 5G, IoT, automotive, and other areas, providing good risk resistance.

In short, the safest Apple concept stocks are those supported by both Apple orders and other business segments. Suppliers solely surviving on Apple orders may have risks that the market overestimates.

Final Reminder on Investing in Apple Concept Stocks

While the fundamentals of Apple concept stocks are clear, they also face obvious concentration risks. If Apple cuts orders, reduces prices, or shifts to new suppliers, the entire industry chain will be affected. Additionally, the investment logic of Apple concept stocks is often driven by market hype, and stock price surges may overestimate the actual improvement in fundamentals.

Investors are advised to regularly monitor changes in the Apple supply chain list, pay attention to new product sales data, and review company financial reports rather than blindly follow market hype. Diversified investments through ETFs or a portfolio of multiple Apple concept stocks can effectively reduce the risk of losses.