Apple Makes ‘Em and Breaks ‘Em
Last week’s iPhone 5 release had a few surprises, including the news that the new phone didn’t come with a near field communication (NFC) chip installed. The problem isn’t that Apple doesn’t like the idea of mobile payments; on the contrary, Apple is currently designing their own mobile payment platform. But Isis, a mobile payments joint venture designed to further NFC development and growth, is backed by Google (GOOG), T-Mobile USA (OTC: DTEGY), Verizon Wireless and AT&T (T), and nobody should expect Apple to support anything that has Google’s fingerprints on it.
Instead, Apple is developing Passbook, which will be featured on the iOS6 using the camera and display components already part of the smartphone device. The platform has already caught the attention of major companies including Starbucks, Ticketmaster, American Airlines, United and Delta, who have already signed on. It was neither an accident nor an oversight that caused Apple to pass T-Mobile over in favor of other carriers to provide service for the iPhone 5. Among other reasons, Apple is waiting to see if AT&T will win final government approval to acquire T-Mobile from Deutsche Telecom and, in anticipation of a favorable decision, already selected AT&T Mobility as an iPhone 5 carrier. Another good reason for not selecting T-Mobile is that the carrier doesn’t support the iOS, and the cost to adapt the iPhone to T-Mobile’s unusual frequency would not be worth Apple’s time or expense. And it probably didn’t help T-Mobile that Samsung is one of their major handset providers.
The apples of the tech giant’s eye are already producing chips at record capacity. Analysts expect to see Cirrus Logic (CRUS)'s sales grow 83.40% next quarter, and revenue to increase 130.20% and reach $224.44 million. Qualcomm (QCOM), one of Apple’s favorite chip manufacturers, is looking at projected sales growth of 12.60% next quarter, and revenue to be up 2.10% at $5.27 billion next quarter. And Fairchild Semiconductor (FCS) expects sales to jump 12.80% next quarter and revenue to increase 53.30% to $382.93 million.
The semiconductor sector has taken a beating, and smaller firms still haven’t recovered from the steep price drop in 2010. With Samsung being phased out, Apple is forced to rely on these chip manufacturers to make up the shortfall, and Toshiba, Elpida Memory and SK Hynix are looking forward toward increased sales and more robust revenues.
Apple’s star continues to rise as the company develops and releases new and innovative products. But there’s an old showbiz adage that goes, "Always be nice to people on your way up, because they’re the ones you’ll meet on your way down." It may be a lesson that one day Apple regrets not learning.