Semiconductor companies that provide Apple with chips for iPhones, iPads and Macs would possibly sound like a secure wager for buyers however in addition they include a component of threat, in keeping with one analyst who follows the sector.

UBS’s Francois-Xavier Bouvignies instructed CNBC Wednesday that his agency has a “impartial” ranking on French-Italian chip agency STMicroelectronics due to the corporate’s publicity to smartphones and Apple particularly.

Work with smartphone companies account for 30% of STMicroelectronics whole revenues, and the corporate has 25% publicity to Apple, Bouvignies mentioned.

“For us, it is sort of a threat to have such publicity to at least one buyer, which is all the time troublesome to foretell,” Bouvignies mentioned.

Apple and STMicroelectronics didn’t instantly reply to a CNBC request for remark.

Apple has been bringing an rising quantity of chip improvement in-house over the previous couple of years, hurting smaller gamers within the course of.

The Cupertino-based firm determined to chop ties with British chip designer Creativeness Applied sciences in 2017 to develop processing models for the iPhone and iPad in-house.

That information despatched the once-listed agency’s shares tumbling as a lot as 71%, because of issues it could closely impression its future. And it did. Creativeness Applied sciences was subsequently offered to China-backed personal fairness purchaser Canyon Bridge Capital Companions for £550 million ($727 million).

Apple and Creativeness Applied sciences introduced a brand new relationship in Jan. 2020.

UBS mentioned it prefers German chipmaker Infineon over STMicroelectronics as a result of it does not have the identical stage of publicity to the smartphone business, Bouvignies mentioned.

Whereas STMicroelectronics has a impartial ranking from UBS, Infineon has a purchase ranking.

Each corporations, nonetheless, are poised to profit from the electrification of the automobile, in keeping with Bouvignies, who mentioned the automotive business accounts for 10% of the worldwide demand for semiconductors.

“We would favor Infineon over STMicro however it would nonetheless profit from the electrification of the automobile,” he mentioned.

Infineon is the world chief within the semiconductors which might be used to handle energy in automobiles, in keeping with Bouvignies, who mentioned that the corporate has about 30% of world market share.

STMicroelectronics is investing vital quantities of capital within the area as a part of an effort to maintain up, he added.

Vehicles with inside combustion engines sometimes use round $80 value of semiconductors within the powertrain, however electrical automobiles use round $550 value, he mentioned.