InvenSense (INVN, Financial) is a leading developer of motion-sensing solutions found in a wide variety of applications, one of the most interesting of which is the smartphone market. InvenSense's business is highly dependent on sales to Samsung Electronics, the world's leading smartphone vendor. That said, as the launch of Apple's (AAPL, Financial) highly anticipated iPhone 6 draws near, there's at least one analyst who thinks InvenSense has the iPhone 6 design win.
What does Craig-Hallum say?
According to Craig-Hallum's Richard Shannon, InvenSense may have had a six-axis motion sensor designed into the iPhone 6. Further, the firm believes that should this design win materialize, it could add $0.25 per share in earnings to InvenSense's bottom line. Great if true, particularly as it would not only drive incremental revenue, but it would help mitigate one of InvenSense's biggest risks, which is being too dependent of Samsung.
Haven't we heard this before?
That said, this isn't the first time investors had been hopeful for an InvenSense win over at Apple. Indeed, back in 2013, Pacific Crest seemed to expect that the follow-ons to the iPhone 5 would feature a three-axis gyroscope from InvenSense.
Separately, Ashok Kumar, at the time working for Maxim, believed that InvenSense was poised to win a slot in the iPhone 5c. OTR Global, Pacific Crest, Goldman Sachs, and Wedge Partners all also expected some InvenSense design-in over at Apple about this time last year.
It didn't pan out, and InvenSense's shares dropped from about $21 a share to $15 once the tear-downs were in. So, as well connected as these analysts may be, there are noguarantees until these devices have been torn down and the suppliers identified.
Could this be the real deal this time?
There's no denying that InvenSense has pretty solid technology, particularly as Samsung -- which typically uses the best components it can find -- has so extensively used InvenSense's products. That said, the iPhone 5s used the following MEMS components:
- Three-axis accelerometer from Bosch Sensortech
- Three-axis gyroscope from STMicroelectronics (STM)
- Three-axis electronic compass from AKM
For InvenSense to displace Bosch (which managed to wrestle away the accelerometer socket from STMicroelectronics) and/or STMicroelectronics over at Apple, it is going to have to present a pretty compelling value proposition. Whether it can do so only the tear-downs will tell, but it is surprising -- particularly given how compelling InvenSense's products seem to be -- that the company hasn't won an iPhone socket to date.
Conclusion
It's not too long now before we know whether InvenSense has won sockets over at Apple, as the next generation iPhone is likely to launch in the September-October timeframe. While last year many InvenSense investors were disappointed, we'll see if this year is more fruitful.
