Call it Apple's albatross. India could mount a formidable future offense, yet as of 2015, China still outstrips the globe when it comes to inexpensively packaging microchips.

But, Wall Street warns, the saturated iPhone market, recently devaluated yuan and unsteady China stock market don't bode well for chip companies that build for Apple (NASDAQ:AAPL), not to mention other chipmakers with heavy Chinese revenue exposure. The danger isn't for companies making products in China, as the devalued yuan stretches the dollar; but companies selling products in China now face an uphill battle convincing an economically strained middle class there to spend.

Estimating chipmakers' Chinese exposure is somewhat problematic, Summit Research analyst Srini Sundararajan told IBD.

"It's hard to distinguish in the supply chain where the revenue attributed to China is coming from," he said. "For example, Cirrus Logic's (NASDAQ:CRUS) chip goes into all iPhones, but only some of them are sold in China."

It's a two-headed problem. Chinese factories assemble an overwhelming number of products using microchips. And, more recently, a glut of chip-powered products have been sold in China.

"There is no apples-to-apples comparison," VLSI Research CEO Dan Hutcheson told IBD. "You have to look at where the companies are in the supply chain."

Sundararajan laid out 49 companies in an Aug. 31 research report. Their estimated percentage of revenue coming from China, based on SEC filings, ranges from a high of 79% for Cirrus Logic to a low of 6% for chip equipment maker Rudolph Technologies (NYSE:RTEC).

On average, 31% of the companies' sales emanated from China.

Only a handful of companies offer a geographic sales breakdown, Sundararajan said.

Apple is among the few.

By: DocMemory
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