The US government has spared no effort to suppress Huawei, and Apple is the biggest beneficiary

Recently, Apple's stock price has maintained a vigorous upward channel, almost always setting new highs, both in terms of stock price and market value. Although the epidemic has not yet ended globally, and some of Apple's stores are not open for business, it does not prevent the capital market from chasing Apple's stock. What exactly is the reason why Apple is so popular? Is it just because Apple is going to release a 5G version of the iPhone this year? Perhaps not entirely. We have noticed that the US government has spared no effort to suppress Huawei. To some extent, Apple is the biggest beneficiary.

At the last moment, TSMC had to bow its head?

As we all know, most of Huawei's wafers are manufactured by TSMC, but now the long-arm jurisdiction of the United States is becoming more and more serious, and TSMC is explicitly required not to do chip manufacturing for Huawei. Initially, the US Department of Commerce required that Huawei be banned from using TSMC's chips if it met the US technical standard of 25%. As a result, TSMC's technology was not enough to meet the ban standard, and TSMC continued to supply Huawei. Later, the United States revised the technical standard to 10%, but TSMC only had 7%, and it could continue to do business with Huawei. In the end, the brutal Americans had to change it to that as long as they used US hardware and technology, they had to obey the US ban and stop cooperating with Huawei. Under the heavy pressure of the United States, TSMC is also in an embarrassing situation.

It is reported that under the strong pressure from the United States, TSMC has to make preparations for both scenarios. In other words, after the US ban takes effect, TSMC has to consider how to transfer and release its production capacity. Although TSMC Chairman Liu Deyin hopes that this situation will not happen, the United States is very tough in suppressing Huawei. At present, TSMC is the world's largest wafer company, and Huawei is TSMC's second largest customer. 14% of TSMC's revenue comes from Huawei's orders, and billions of dollars of revenue comes from Huawei's orders every year.

After Huawei was suppressed and TSMC was unable to produce wafers for Huawei, it is reported that Qualcomm and Apple have increased orders to TSMC. Apple has significantly increased its 7-nanometer orders to TSMC in the fourth quarter. In other words, Apple is expected to be one of the biggest beneficiaries in the process of suppressing Huawei in the United States. Because Huawei is currently the only company that can compete with Apple in the high-end mobile phone market in China and even the world. If Huawei's wafer problem is not solved, it will gradually degenerate in the competition with Apple. Apple will find it difficult to have competitors in the high-end market, which will undoubtedly be of great benefit to Apple's profit increase.

In fact, according to research, Apple recently revised up its iPhone order guidance, and the Q2~Q4 outlook was fully revised up. This revision was much higher than expected (the original expectation was a downward revision). In addition, in the Chinese market, Apple has also increased its promotion efforts. During the 6.18 promotion, the sales volume of Apple phones was also amazing. It can be seen that Apple intends to seize the market share vacated by Huawei's high-end phones due to short-term supply constraints. Increasing orders to TSMC is also to meet this development demand, thereby seizing more market opportunities and shares in the high-end mobile phone market. In addition, Apple's supply chain manufacturers have raised their performance expectations, and a large part of the factors are due to the increase in Apple's production capacity demand. It is reported that some suppliers have been strongly supported by the continuous replenishment of orders from iPhone11/SE2, and the sales of iPad, AirPods, and MacBook have exceeded expectations, which has boosted their performance and revised their performance expectations upward.

Is Apple, the beneficiary, like a "wild horse running away from its reins" and running away in the capital market?

Since entering June, Apple's stock price and market value have remained high, and have repeatedly set new highs, with a market value approaching $1.5 trillion. Among them, Credit Suisse pointed out in the report: "Apple's growth momentum is exciting, which is evidence that Apple is able to increasingly commercialize its nearly 1 billion iPhone user base." Previously, Credit Suisse raised Apple's target price from $260 to $295, maintaining a neutral rating on the company's stock price. The external and internal drivers for Apple to obtain 1 billion users are equally important. Huawei was originally Apple's biggest competitor, but now because of an unfair "neck-stuck", Apple has gradually taken the initiative in the competition with Huawei.

Moreover, this year Apple will launch a 5G version of the iPhone, and some early iPhone users have reached the time window for upgrading. For a time, the market believed that the emergence of the new generation of iPhone SE would allow some iPhone 6 users to enter the "channel" of changing phones, and the emergence of the 5G version of the iPhone will inevitably bring more iPhone users to iterate their phones. The contribution of these users to Apple's performance and profits is undoubtedly huge. When there are not enough competitors in the market, the new version of the iPhone can get a higher premium and profit margin. Some analysts predict that "with about 350 million people entering the upgrade window of iPhone phones, this indicates a high demand for Apple's next generation of devices. The 5G big cycle is coming, and the iPhone 12 series will be welcoming this big cycle." Some analysts even raised Apple's stock target price from $350 to $375.

Although analysts say that the continued growth of Apple's services and wearables business is the key to the company's promising prospects. In fact, Apple's largest revenue still comes from the iPhone itself, and the resulting market monopoly, which boosts its service revenue accordingly. Imagine if there was no growth in iPhone users, who would its services be sold to? Due to the support and expansion of a large number of hardware users, there are potential opportunities for more revenue for its services. According to Apple's current performance in the capital market, a market value of $2 trillion is not a dream. Apple's superficial promotional activities in the Chinese market are also, to a certain extent, to release "inventory" and make room for 5G products in the second half of the year. If we add the market opportunities of products such as Apple Watch and AirPods Pro, Apple's hardware foundation for promoting services is undoubtedly very large.

Huawei has a lot of difficulties to overcome, the biggest problem is the wafer problem

Once TSMC can no longer manufacture high-end wafers for Huawei, the impact on Huawei will be profound. After all, Huawei's flagship products still have a great influence in the high-end market, and it is currently the only company that can compete with Apple in the high-end market. After all, Samsung is no longer what it used to be. Originally, Huawei had every chance of leading 5G smartphones into a new era, but because of the hegemony of the United States, Huawei is now facing unprecedented difficulties. More importantly, in addition to TSMC, SMIC has also stated that it may be difficult to provide foundry chip business for Huawei, and the reason is the same as the result of the long-arm jurisdiction of the US government.

To some extent, the survival of Huawei mobile phones is the most critical. Although the mobile phone business is not all of Huawei, the development and improvement of Huawei mobile phones in the past few years have been very fast, and the same is true for technology reserves. But the only regret is that in terms of wafer manufacturing and other aspects, our domestic technical capabilities are still very insufficient. Although relevant departments have always encouraged the vigorous development of semiconductors and integrated chip industries, the ice is not frozen in a day, and the technology gap cannot be filled in a short period of time. It is not that some entrepreneurs shout that they can catch up by investing billions of dollars. You must know that in many basic technology fields, we still have many shortcomings. After Huawei has invested huge financial, material and human resources in chip research and development, it cannot promptly productize and marketize its own research and development. The losses brought about are very regrettable. More importantly, in the competition with Apple, it will gradually lose high-end market opportunities.

For TSMC, of ​​course, it does not want to lose Huawei, an important customer. After all, orders of several billion US dollars a year are not a small number. Apart from Apple, no other company can bring such high orders to TSMC. Without Huawei, TSMC will not have an easy time. Although TSMC is also introducing other alternatives, such as Qualcomm and MediaTek, Huawei's capabilities and needs are obviously stronger in comparison. Huawei needs support and the help of the industrial chain. At the same time, it also calls for our technological reserves and research and development progress, especially in terms of technological investment in wafer manufacturing, which should be laid out as a long-term plan. After all, no one wants to be "stuck in the neck" to survive.