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Why Apple Remains on Top

Photo: Photo by Getty

These must be lonely times for iPhone haters. Apple’s share of the mobile market has been growing, according to IDC, which has insulated the company a little from the shrinkage in the smartphone market. (Those damn iPhones are just so easy to use!) As the 2.4% iPhone sales decline in its recently reported June-quarter results showed, though, Apple isn’t entirely immune. Analysts expect the company to finish the fiscal year, which ends in September, with revenue down 2.9%, according to S&P Global Market Intelligence. In contrast, other big tech companies like Microsoft and Alphabet are growing, albeit slowly. That hasn’t affected Apple’s standing with investors too much. The stock trades a big premium to Alphabet, on a forward earnings multiple, and only a slight discount to Microsoft, according to Koyfin.

There’s a few reasons for this, of course, including the fact that consumers who own Apple products seem as devoted to the brand as some Republicans are to Donald Trump. On a different front, Apple’s sheer size enables it to win incredible terms from its suppliers, ensuring it can control costs better than anyone. We illustrated one example of that in this eye-opening piece this week on how Apple will save billions on new chips for its iPhones, iPads and Macs thanks to a favorable deal it has struck with Taiwan Semiconductor Manufacturing Co. Basically, the Taiwanese chip giant is making Apple’s custom-designed chips using TSMC’s newest manufacturing process a year before it will do the same for anyone else. And TSMC agreed to cover the cost of any defects that come up in the course of the manufacturing, Wayne says.

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From left: Paul Graham, Garry Tan and Michael Seibel. Photos by Getty. Art by Mike Sullivan.
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