Update: The WSJ reports that Apple is withholding licensing fees from Qualcomm pending resolution of the legal dispute between the two companies. A source estimates that Apple accounts for around 12% of the company’s total revenue. Qualcomm’s share price is down 19% so far this year.
We saw recently the impact on the share price of Imagination Technologies when Apple announced that it expected to stop using the company’s GPU tech within two years. The stock plummeted by 70%, reducing its market valuation by hundred of millions of dollars.
Not surprising when it turns out that royalty payments from Apple on the company’s chip designs forms almost half of the company’s income – and it is not the only company to be so heavily dependent on Apple’s business …
Statista has put together an interesting chart (below) showing other major companies which rely on Apple for between half and three-quarters of their total sales.
As our chart illustrates, many companies from different fields have their relationship with Apple to thank for more than 50 percent of their annual revenue. Relying on a single customer in such a way poses a big risk, which is why Apple’s publicly-listed suppliers often trade at lower multiples than similar companies with a more diverse customer base. It also puts Apple in a position of power in contract negotiations, where the iPhone maker can use its leverage to dictate terms and conditions.
Imagination is also not the only one on the list to be at specific risk. A recent report suggested that Apple may also be planning to drop Dialog as a supplier, and Credit Suisse believes that Cirrus Logic is at ‘medium to low risk.’
The remaining companies on the list are Foxconn, Japan Display and Glu Mobile.