(Bloomberg) -- Apple Inc. is planning updates to its AirPods earbuds next year, seeking to capitalize on the success of a product that has become an important source of growth.The Cupertino, California-based technology giant is working on two new models: third-generation entry-level AirPods and the second version of the AirPods Pro earbuds, according to people familiar with the plans.The models will join other new Apple audio devices like the HomePod mini and upcoming over-ear headphones. The company has also weighed launching another smart speaker that would sit between the HomePod mini and the original version in the line up.The design of the updated entry-level AirPods will be similar to the current AirPods Pro, gaining a shorter stem and replaceable ear tips. Apple is also looking to improve battery life. That model however will not have higher-end AirPods Pro features like noise-cancellation, said the people, who asked not to be identified discussing private matters.For the new AirPods Pro, Apple is aiming to make the earbuds more compact by eliminating the short stem that currently sticks out from the bottom. A design in testing has a more rounded shape that fills more of a user’s a ear -- similar to the latest designs from Samsung Electronics Co., Amazon.com Inc. and Google.Integrating noise-cancellation, wireless antennas and microphones into a smaller AirPods Pro casing has proved challenging during development, which could result in a less ambitious design when the product is finalized, the people said. An Apple spokeswoman declined to comment.Apple has internally discussed launching the new low-end AirPods during the first half of next year. The company is also planning new wireless chips to power both models. Luxshare Precision Industry Co. and Goertek Inc. are expected to handle most of the production for the new earbuds.Goertek, which derives roughly 40% of its revenue from Apple, jumped 2.5% to a record in Shenzhen trading Tuesday. Luxshare inched up 0.2%, after having more than doubled this year. After being mocked by some early on, AirPods have become one of Apple’s biggest hits in recent years. The company’s Wearables, Home and Accessories division, which includes AirPods, reported $6.5 billion in revenue in the latest quarter, up more than 70% from two years ago. The earbuds may get a new sales boost soon because Apple stopped including headphones with new iPhones.The success has attracted rivals such as China’s Xiaomi Corp. that offer more affordable options.Read more: Apple Ceding Wireless Earbuds Market ShareApple currently sells entry-level AirPods for $159 and the AirPods Pro at $249. The original AirPods launched in 2016 and were last updated in March 2019. The AirPods Pro came out in October last year.Beyond the new AirPods, Apple has also internally weighed a new HomePod that sits in size, price and sound quality between the original $299 HomePod and the $99 HomePod mini. It’s unclear if Apple will ultimately launch that product or just further cut the price of the higher-end version.Apple is still planning to announce high-end, noise-canceling over-ear headphones. The device has faced several development challenges over the past two years and has been delayed multiple times.The headphones were due to go into production weeks ago, but that was pushed back due to problems with the headband, a person familiar with the matter said. That part was deemed too tight in some testing.Read more: Apple Developing High-End Headphones With Interchangeable PartsThe company initially wanted to include large touch pads on the sides of the headphones, but reduced the size of those panels. Apple has also scaled back some of the interchangeable functionality of the headphones that were a hallmark of the initial concept. The latest version of the product is likely to lack a replaceable headband, but could still include interchangeable ear pads.(Adds shares of Chinese suppliers in 8th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
T-Mobile got the ball rolling with nationwide rollout of 5G after its acquisition of Sprint earlier this year, but AT&T and Verizon weren't far behind. Now the marketing campaigns have begun with a fervor, touting "free" 5G access with unlimited data plans to get consumers to purchase a new 5G-enabled phone. Three stocks to buy now for the long 5G haul are Xilinx (NASDAQ: XLNX), Uniti Group (NASDAQ: UNIT), and Xiaomi (OTC: XIACF).
Apple (NASDAQ:AAPL) had its minor moment in the media earlier this week as it presented more of its iPhones. The phones are finally catching up with bigger competitors such as Samsung Electronics (SSNLF,005930 Korea), Xiaomi (OTCMKTS:XIACY) and ZTE (OTCMKTS:ZTCOY) by containing transmission chips and software to operate on fifth-generation (5G) wireless standards. 5G is not really in the U.S. yet, but is increasingly in China and South Korea. But the company is at least trying to be relevant. Behind the glass and painted cases of modern phones are a host of semiconductors that the company had little to do with in creating or producing. Like for most of Apple products, they do the marketing — others do the work. But it is a good news peg to discuss the semiconductor chips that are so vital for the world’s electronic gadgets, as well as everything else from our cars to planes and even the refrigerator in your kitchen.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Everyone tends to focus on the big brand names in technology, not the companies that do the grunt work to make the guts of modern products. Hence companies like Apple get lots of headlines and companies that I am presenting to you include some that aren’t household names. They should be, though, if you are investing in more of the new-new things coming to the market. Founders Semiconductors, or chips, are firmly in the vernacular of technology investors. But I would argue that not many understand the process of getting from silicon to the finished product that makes a gadget work when you hit the power button. Foundries are extremely capital-intensive facilities that come with all sorts of massive barriers to entry. They need lots of space and can be highly environmentally disruptive, both in construction as well as in operation. And permits from governments, from national to local entities, can be very, very difficult to get. I remember many years ago in Shanghai, I was invited to an initial presentation by a coop led by Siemens (OTCMKTS:SIEGY) about a new fabrication plant that was getting built in south-central China. The project was supposed to get done in under a year — which seemed impossible anywhere beyond China. They took a small mountain and leveled it, making a clear building site with access to transportation of raw materials and finished chips. And then they built and finished it all ahead of schedule and the plant is still humming along today. This, of course, would never happen in the U.S. But that’s yet another great thing about China when it comes to business. 7 Dividend Stocks To Buy For Adventurous Investors And China remains the go-to nation for foundries, along with some regional locations. And despite all of the bluster over competition – China and its regional partners are the go-to places for getting chips made from start to finish. Here are some of the companies that I would have you take a look at if you are interested in investing in what’s behind the brands of electronics that make it all happen. Samsung Electronics Taiwan Semiconductor (NYSE:TSM) Semiconductor Manufacturing International Corporation (OTCMKTS:SMICY) United Microelectronics Corporation (NYSE:UMC) Samsung Electronics Samsung Electronics is a Korea-based behemoth that has a great relationship with China and the region when it comes to manufacturing just about everything electronic. It is one of the globe’s leaders in foundries for chips. That in turn feeds its own needs for its own high-value-added products as well as supplying others. This company should be in any portfolio that wants to be exposed to the best of technology, including foundries. Source: Samsung Electronics Revenue – Source: Bloomberg Revenue for the company continues to expand year after year with the past decade showing gains averaging 7.51% on a compound annual growth rate basis (CAGR). Of course, foundries are just one business — along with batteries (including processing all sorts of very nasty chemicals to make them happen) as well as countless finished industrial and consumer products. But with nearly everything from soup to nuts in its operations, its operating margin is very impressive at 12.1%, demonstrating its cost controls and excellent management. This, in turn, drives an impressive return on shareholder’s equity of 7.5%. Dividends are getting better, running at a yield of 2.4%. And with lots and lots of cash and pretty much no real debt, the company is the best to start with in the chip business. Source: Samsung Electronics Total Return – Source: Bloomberg The shares in U.S. dollars have been a consistent performer with the past decade alone generating a return of 354.81% for an average annual equivalent return of 16.34%. One thing to note — you may have to call your broker for execution, and this may or may not incur a fee. Taiwan Semiconductor (TSM) Taiwan Semiconductor (TSM, 2330 Taipei) is a Chinese behemoth in the chips business headquartered in Hsinchu on the island of Formosa. Like for Samsung, Taiwan Semi provides a litany of chips and related products that generally are done under contract with a who’s-who in the electronics markets. It has massive foundries throughout China and its territories and works well with governments in its plant and foundry developments. And it in turn generally controls one of the largest percentages of chips made in any given year for customers around the globe. Revenue from its more focused product line on chips and components continues to rise. Over the past decades, the company has achieved revenue gains running at 12.56% on a CAGR basis. Source: Taiwan Semiconductor Revenue – Source: Bloomberg Its margin is much better than for the much more diverse Samsung, and is running currently at 34.8%. 9 Stocks to Buy for a Wild Ride in October And in turn, this drives a return on shareholder equity at a whopping 29.1%. Source: Taiwan Semiconductor Total Return – Source: Bloomberg The shares have returned 989.02% over the trailing decade for an annual equivalent return of 26.95% including a dividend yield of 2.2%. And with lots of cash and little debt, the company is set to continue to expand as needed. Semiconductor Manufacturing International Corporation (SMICY) Semiconductor Manufacturing International Corporation (SMICY, 981 Hong Kong) is also known as SMIC. It, too, has some of the leading foundries in China and does a great job of running them from its headquarters in Shanghai. Like for Taiwan Semi, SMIC does a lot of contract work — which makes for a broad play on chips and the overall demand for electronic goods. Source: SMIC Revenue – Source: Bloomberg Revenue has a long-term history of steady growth, with the average running at 10.43% on a CAGR basis. The company has a bit less cash on hand and a bit more debt — which can be more common for larger-scale Chinese companies. But at only 24.00% of assets, it is not an issue — nor should it limit growth, as it is well-supported by the government. Source: SMIC Total Return – Source: Bloomberg The stock has been plodding along for many years until the last two — but since then, it has returned 190.14%, for a quick average annual equivalent of 70.21%. It is also a cheaper stock like Samsung as its stock is valued at a low 2.07 times its intrinsic value (book). No dividend yield, but it does make for a value buy in the foundry space. United Microelectronics (UMC) United Microelectronics Corporation (UMC, 2303 Taipei) is more commonly known as UMC. And the company makes a variety of semiconductor chips and integrated circuit chips for a litany of companies, from consumer to industrials. It has major Chinese foundries and assembly facilities, and since its founding back in 1980, it has continued to earn contracts year in and year out from customers around the world. Source: UMC Revenue – Source: Bloomberg Revenue has been gaining at a bit more of a steady, if not subdued level compared to its foundry peers. Gains average only at 2.71% on a CAGR basis. And margins are tighter than for its cross-town rival Taiwan Semi at a more subdued level of 3.2%. But with more cash and controlled debt, the company is still a go-to maker with ample government support. Source: UMC Total Return – Source: Bloomberg Shares have had a history of muted return until the past two years – but still have garnered some 250.39% for shareholders over the past five years. 7 Big Tech Stocks to Buy for Blockchain and Crypto Exposure And with a dividend yielding 2.50% and shares even cheaper at 1.83 times intrinsic value – closer to the absolute bargain of Samsung it does make for a value in the foundry market. On the date of publication, Neil George did not hold (either directly or indirectly) any positions in the securities mentioned in this article. As the editor of Profitable Investing, Neil George helps long-term investors achieve their growth & income goals with less risk. With 30+ years of experience in the financial markets, Neil recommends undiscovered and underappreciated companies that offer subscribers double-digit yields now and triple-digit returns over time. More From InvestorPlace Forget The Election… Pick These Stocks for the Win in 2021 Why Everyone Is Investing in 5G All WRONG America’s #1 Stock Picker Reveals His Next 1,000% Winner Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post 4 Semiconductor Stocks Making the Guts of Everything Electronic appeared first on InvestorPlace.