Samsung slows disown since customers are waiting for new iPhone
Shah thinks that softness in shares of wireless chip vendors Avago Technologies (AVGO), Skyworks Solutions (SWKS), and RF Micro Devices (RFMD) on the rumors is an over-reaction, and that actually production appears to be about as planned for the S4:
The surprise reports have been driving uncertainty in the RF market, with names highly leveraged to Samsung such as SWKS, RFMD, and AVGO displaying the stress. While a slowdown for the Galaxy S4 is concerning and could greatly impact related component players, we feel that a general slowdown was inevitable and previously calculated into build forecasts. Historically, our PA companies tied to Samsung’s flagship device see a ramp a few weeks ahead of a launch and one very strong quarter at the time of the launch and then a pause as channel inventory begins to work down. Our discussions with several industry sources indicate that they have not witnessed any changes to Samsung’s build forecast and that demand has been as expected with the exception of possible slowing orders in Europe [...] Although we do believe sales for the Galaxy S4 will begin to slow as the initial fanfare wears off and news of new products begins to enter the market, our feeling is that the concern around a significant drop off in volumes is overblown. Even if the reports are accurate, it is likely that the reason for the slowdown is due to consumers holding out for the next iPhone or waiting for a lower cost device. If that is the case, sales for SWKS, RFMD and AVGO should be safe, but shifted, as we expect each company to maintain or grow their content in the updated iPhone. The point of concern for the RF names would only be if a slowdown was due to diminished market demand for handsets and we have yet to see any indications of this happening.