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yes it is, Adama. The wifi/rf capability needs the wifi chip (the brain) plus all the components which are part of the transmitter & receiver of the rf signals - the filters, amplifiers, switches, antenna and etc. typically, all these are supplied by Apples' suppliers such as Broadcom, Skyworks, Qorvo, Murata. If there is a change to the chip, I believed there will be some impact to the transmission and reception of rf signals as there's a lot of noise that could affect it. RF/mixed signal products testing itself is not easy :)
if i read the briefing report correctly, it hinted that inari lost its assembly and packaging jobs for high band filter (wifi, bluetooth etc) to taiwan ASE therefore caused a 8% drop in rf segment revenue.
thats right, Adama. But there is no explanation given to why lost to ASE or why the customer switch to high band filters :) That's where I am suspecting it is driven by the change of wifi chips. If it is driven by the change of wifi chips, then, the lost of the revenue is a structural change and not a temporary change.
iirc, apple wanted to stop using broadcom's wifi chips many years ago but everyone here said it has no impact to inari because it is a wifi chip, not rf chip...
You are right, Adama. Apple has long wanted to reduce the dependency on Broadcom's wifi chip. And the latest Iphone 17 is using wifi chip from their own in-house design. And this wifi chip design / the N-series radio platform is designed to scale across product categories such as Mac, iPad, Apple Vision Pro, and HomePod hardware.
I was wondering what is driving the rapid decline of the share price too until the analyst briefing mentioned about the RF segment decline driven by customers shifting to premium filters, Adama.
RF - customer focuses on higher band and deemphasizing low-mid band - hence earnings distorted. This is about 8%-10% of total sales/
year. Current UR: 65% last Q, so as this Q but on slightly higher tester count.
Inari is in FBAR filter for premium end; assembly is on discreet (mid band FBAR) and this is the one got affected - to do with the shift in customer's strategy
China/Taiwan companies are too competitive and taking over manufacturing orders. When times are not good and cost cannot be easily passed through to consumers, 2026 will be “Year Of Cost Down & Margin Compression” for exporters.
To make it simple to understand, Inari didn't lose the Premium RF business to ASE, but they're simply not ready, so ASE get the job. Currently Inari Premium RF line is under NPI, should be fully running next year, ready for iphone 18. But good news is, Inari still maintain most of the testing job for Fbar.
china/taiwan tech companies spend a lot of money in capex to stay ahead of the game while malaysia tech company prefer to keep massive cash in the bank. That is why the world is shifting toward advance packaging while malaysia osat is still depending on labour intensive traditional packaging...
Best part is we malaysia investors love the unproductive cash sitting still in the bank rather than the company spend it on huge capex...
you are right. there are number of advance packaging techs have been developed. but yet to reach mass productions. maybe 2026 will see more products reaching mass productions
Cheng: Usually inside Iphone will have lots of RF filters, not just the premium one. Inari lose out on packaging the Premium one. But they still benefits from lower end and also testing part.
RF - end-customer focusing on premium parts, and deemphasizing discrete and low-mid band. Seeing more shipment from premium products (FBAR) - but premium products market share dominated mainly with competitors. Competitors S and Q combining into 1, and with that hopefully gaining more traction with new series premium phone.
A potentially better 2QFY26. Notwithstanding the assembly lull, testing utilisation stood above 80% as Inari commands full testing allocation from Customer B (vs only one-third for assembly). Hence, the stronger demand for premium modules, which are mainly assembled by its Taiwanese peer and ultimately sent to Inari for testing, has partly cushioned the weaker assembly loadings. We expect a moderate improvement in 2QFY26, supported by additional testers cons
The revenue loss from mid-band RF assembly could be mitigated by potential gains in premium module assembly for next generation handset in FY27F. We understand Inari is working with Customer B to capture a portion of premium product assembly currently handled by its Taiwanese peer, which is facing capacity constraints due to surging demand for advanced packaging for AI applications, though the quantum remains uncertain at this juncture. Additionally, the Skyworks-Qorvo merger may prompt Customer
Additionally, the Skyworks-Qorvo merger may prompt Customer B to maintain its discrete and mid-band modules at the request of end customer in light of its dual-sourcing business continuity strategy, thereby potentially helping to recover Inari’s RF assembly business in FY27F, in our view.
The discussion here is very interesting. Everyone here is very professional, peacefully and rationally analyzing the company's business model and fundamentals. It's like a group of professional investors sitting around the same table analyzing industry development in a seminar. I hope this forum will be more high quality discussions like yours here.
FBAR filters / Skyworks-Qorvo merger - this could be a risk. Qualcomm and Skyworks have FBAR filters too. There's risk to Broadcom's FBAR filters too. Will Apple switch out to internal/other competitor's products and whether will it be made/assembly and test in the US? The last contract renewal signed between Broadcom and Apple is back in 2023 and its usually a 3 years contract; which means will be expiring in June'26. However, the catch is that no details was shared on how long was the contract duration. https://www.straitstimes.com/business/apple-inks-multi-billion-dollar-deal-with-broadcom-for-us-made-chips
Inari's RF segment won't experience explosive growth, it will be flat because iPhone users won't suddenly doubled.
However, the next big one is their Optical Transceiver business, this one should experience big growth in coming quarters or years.
the contribution of datacom segment is just around 15% therefore wont enough to make up the potential loss of revenue in rf segment. Maybe when it can contribute about one third of revenue then only we start talking...
yeah... rf segment revenue loss seems to be structural. any idea where you guys get the details of optical transceiver business or the datacom segment revenue breakdown? I cant find it in qr report or annual report.
Many of those "secret" information only available to the analysts and it is up to them to tell or not to tell the retailers in their research report. ;)
My point exactly. If the contribution of the revenue growth from the datacom segment can make up the loss of revenue from the rf segment, the share price will certainly not drop at this scale...
Someone out there must already know something that is not a public knowledge yet...
Lol, I wont go hiking with you as I dont want to be eaten by the tiger, Adama. And, need to make sure there are people that I can outrun in the hiking group in future. Lol, no pun intended.
My point of view is, the big drop is within expectation. Let me explain:
1. Inari QR missed expectations, so institutional fund managers have to readjust their portfolio, doesn't matter the future prospect is good or bad, they need to readjust based on current earnings. They have their sop to follow.
2. This QR missed coincidentally met with market correction period, hence buyers stays away, so the drop get bigger.
3. It broke MA200, this level usually triggered auto sell.
4. Short sellers took advantage and further pilling up on the selling pressure, we can see that they're trying to break RM1.80 level to trigger more selling.
5. Margin calls force selling.
Some reports mention that WIN(穩懋) and ASE(日月光) have secured projects for Apple's independently developed RF components. I reviewed their financial reports, and they do not disclose much customer information, but I did saw strong growth in ASE OSAT business and WIN performance is explosive growth. (Probably due to their AI Chip business)
Traditionally, contract manufacturers are unwilling to reveal too many customer details,
just like adama said, those information is "secret" for them. so in this situation, we can only make educated guesses.
Adama, not that bad in my point of view, within expectation already since Inari management already said RF business will be flat. Hence the reason I'm here is for their optical transceiver, the next big growth. Currently Inari management said that there will be at least double digit growth for this segment. P34 and P55 plant is handling it.
All this edi explain in the investment research report after the QR review by management...........The company is expanding into memory and AI segment which are growing n also acquired LUMI in order to reducce high depandant on RF.
I kinda agree with Adama actually. Here are the transcripts where Apple story typically sits in non-AI and resonates with Adama's concern; wireless - (1) Turning to non-AI semiconductors, Q4 revenue of $4.6 billion was up 2% year on year and up 16% sequentially based on favorable wireless seasonality. Year on year, broadband showed solid recovery. Wireless was flat, and all the other end markets were down as enterprise spending continued to show limited signs of recovery. (2) Accordingly, in Q1, we forecast non-AI semiconductor revenue to be approximately $4.1 billion, flat from a year ago, down sequentially due to wireless seasonality. (3) We don't see a sharp recovery that is sustainable yet. I guess give it a couple more quarters. We don't see any further deterioration in demand.
If the reason you choose Inari is for iPhone business, I think there's no excitement, iPhone users will not double anytime soon.
If you see Inari next growth is Optical and Memory, there's a lot of excitement.
So in the end , just be clear of the reason why you choose to look at Inari. If the reason is no longer there then can look elsewhere.
1. Datacom & Photonics
Traction & Expansion: Seeing positive growth in Fiber (ChipFab) from US clients. To support the "ISL" project, the factory floor space at P13 has been doubled.
AIP team is actively developing next-generation products for clients across both the P13 and CK2 facilities.
2. Power Management
SiC Capabilities: The Silicon Carbide (SiC) production line is fully operational.
If there is one reason why I am looking at Inari, it is bcos of its balance sheet. Holding back bcos of the sluggish major segment revenue contributor. There's limited information on opto segment, ho kuan. what was shared so far in this thread - RF segment 60% revenue, opto/datacom 15%. The numbers is not as optimistic as the prospects of opto if you will. No doubt there are a lot of activities/diversification going on and the last JV in China has yet to ramp up and another JV with Sanan Opto currently in progress. The optical transceiver is probably related to the JV with PCL Technologies back in 2019. It will probably take another one to two years at the minimum to see some progress in all these JVs?
Balance sheet for tech companies doesn't really carry much weight, tech companies is all about growth. So if you can't see any growth in it, then it's time to look elsewhere.
Cheng, you should not find your information only in this thread or forum, get your information through various reports, news, and most importantly management briefing. If you need a tool to help you do research, subscribe to Gemini 3, very useful for fact findings.
The Optocoupler segment is converting numrous products into volume production.
Currently qualifying additional US products and co-developing a high-speed SiC power solution with a US customer.
Memory
Transitioning to become the single-source supplier for a key US customer, aimed at maximizing capacity in Penang.
Maintaining high production yields while working on new product introductions (NPI). The company is also expanding Back-End (BE) services by adding Visual Inspection (VI) to post-assembly processes.
Thanks, ho kuan :) Its easy to find good news bcos of unconscious bias. These conversation and sharing is good if we look at it objectively; the power of diversity if you will and not about who is right or wrong. I am pessimistic with the sluggish RF segment which is the major contributor and hence I am biased negatively. You are optimistic with opto segment and that helps to keep my biases at bay :) Your stories and my stories are different and the numbers shared by gabriel above will tell us in future how it evolves over time. Put the money where the numbers are heading.
agreed, adama. hope to see some positive development in coming quarters. right now, it seems to be the laggard among the peers in main market semiconductor sector. funds/insti seems to rebalancing their positions judging from the chart.
When similar thing happened most trader are well prepared there wont be similar incident blsck goose like last year . Not worry tok much n especially in December