Apple has faced growing concerns about softer demand for its iPhone 18 models. But these ripple effects extend far beyond the technology giant -- it could become an issue for semiconductor company Cirrus Logic, too.
Barclays analyst Tom O'Malley sees a "difficult outlook" for Cirrus Logic given Apple's potential unit production cuts, weaker iPhone sales, and a lack of future growth drivers for Cirrus Logic.
The firm downgraded Cirrus Logic's shares to Underweight from Equal Weight and lowered its price target to $95 from $130.
Earlier this month, Nikkei Asia reported that Apple had told suppliers to cut component production for iPhone 18 Pro and Pro Max models. Suppliers blamed the production cuts on Apple's price hikes, which were driven by surging memory chip costs, according to the report.
Apple didn't respond to a Barron's request to confirm the information.
Adding more fuel to the fire, soaring memory prices have created a major cost obstacle that could pressure manufacturer margins through 2028, O'Malley wrote. He thinks that because he sees a lack of new component wins in 2027 for Cirrus Logic, it'll be difficult for the company to grow as needed to offset falling unit sales and shrinking margins.
Cirrus Logic -- a supplier of components for FaceID, digital amplifiers, and camera controllers for Apple's iPhones and other devices -- has long relied on the smartphone giant as its dominant customer.
This supply chain hurdle has only blurred Cirrus Logic's outlook even further -- and that's a big concern for investors.
Shares of Cirrus Logic dropped 1% to $109.66 Wednesday after closing up 2% during the previous session. Cirrus Logic has fallen 6.5% this year as of the close of trading Tuesday. Apple stock rose 0.2% on Wednesday.
Wall Street, however, remains bullish. Out of seven analysts tracked by FactSet, five still pitch Cirrus Logic stock as a Buy compared to just a single Sell rating. In fact, this marks the first time a bearish outlook has touched the stock since July.
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