AAC the Mobile / Tablet Sound Solutions operations appear to have seen some improvement but it is still undergoing restructuring. While Sound Solutions should be better placed than a year ago, regaining meaningful share may prove to be challenging given uncertainties over ongoing restructuring. We believe that AAC is maintaining its lead with its competitive edge in design for manufacturing capability, automation, scale and execution.
AAPL’s migration to a new audio chipset gives comfort to an acoustic platform upgrade in its next-generation iPhone/iPad. A positive to AAC. We believe AAC’s near-term outlook is intact and unlikely to be negatively impacted by AAPL’s inventory adjustment, given diversified customer exposure and better inventory control on a relatively shorter lead time (AAC ~30 days vs chipset peers ~80 days).