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Apple (AAPL) has become one of the world's largest buyers of semiconductors. Whenever a new Apple device is introduced, a race is on to tear down the device and find the origin of the components inside. This time the winner is iFixit. iFixit reports the following components inside the new iPad.
--Texas Instruments (TXN) CD3240 driver device
--Broadcom (BRCM) BCM4330 802.11a/b/g/n MAC/baseband/radio with integrated Bluetooth 4.0+HS and FM transceiver; 2 x 4Gb; BCM5974 microprocessor; BCM5973 I/O controller
--Elpida LP DDR2 = 1 GB DRAM in separate packages in a 64-bit configuration
--Fairchild Semiconductor International (FCS) FDMC 6683
--Apple 338S0987, Cirrus Logic (CRUS) Logic audio codec
--Qualcomm (QCOM) PM8028 Power Management IC; RTR8600 multi-band/mode RF transceiver for 3G and 4GLTE bands
--Toshiba Y0A0000 Memory MCP
--Triquint Semiconductor (TQNT)TQM7M5013 quad-band linear power amplifier module
--Avago (AVGO) A5904
--Skyworks (SWKS) SKY77468-17 front-end module
Elpida has filed for bankruptcy. Toshiba is a very large firm and inclusion of its memory in the new iPad has no material impact.
Our 30 years of experience has shown that the way to make money is to focus on disparities between market participants' expectations and the reality.
On the surface, it seems that Broadcom is a big winner, but most of the Apple impact is already discounted in the stock. Broadcom is also up against stiff technical resistance. The stock is a buy either on a significant pull back or on a break out from the resistance.
Components from Qualcomm in the new iPad are as expected. However, Qualcomm has its own drivers that are likely to move the stock higher but in the short term the stock is overbought.
Cirrus was widely expected to provide audio codec. In the short term the stock is overbought. If the stock continues to run, it may form a good short candidate.
Components from Fairchild and Texas Instruments are not material to their financial results. If the stock of these two companies runs up from here on this news, they will form great short selling candidates.
This leaves us with Skyworks, Avago, and Triquint as potential long investment candidates. To generate profits, the timing and price of the entry is critical.
About Me: I am an engineer and nuclear physicist by background. I have founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the Chief Investment Officer at The Arora Report, which publishes four newsletters to help investors profit from change. Please feel free to write me at Nigam@TheAroraReport.com.
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Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, and $525.
