Shares of companies that sell semiconductors to Apple Inc got a shot in the arm on Tuesday after the iPhone maker posted a fiscal fourth-quarter report that pleased Wall Street.
Supplying technology to Apple can turn small companies into Wall Street darlings as new versions of the iPhone break quarterly sales records and remain the gold standard in the smartphone industry.
But selling to Apple can be a double-edged sword, with the world’s largest company by market value widely seen as forcing its suppliers to accept razor-thin profit margins in order to hold onto its business.
After the stock market closed, the Cupertino, California company said it had record fourth-quarter iPhone sales of 48.05 million. Analysts on average had expected sales of 48.72 million iPhones, according to a poll by Fortune magazine.
In the same quarter last year, Apple sold 39.27 million iPhones.
Apple’s stock rose as much as 3 percent in after-hours trading. Ahead of its earnings report, the stock closed down 0.63 percent at $114.55 on the Nasdaq.
Cirrus Logic, which provides audio technology used in the iPhone, rose as much as 4 percent in extended trade following Apple’s results. Power chipmaker Avago Technologies rose 2.8 percent.
NXP Semiconductors, which makes the “swipe” technology integral to the iPhone’s Apple Pay feature, was up 2.8 percent after the bell.
Shares of Apple and some of its suppliers had fallen on Monday after German mixed signal integrated circuits maker Dialog Semiconductor, which also sells chips used in the iPhone, announced quarterly results that were lower than analysts’ expectations.