The optical module maker is heavily reliant on the U.S. tech giant, which accounted for 99% of its revenue in the first half of the year

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Key Takeaways:

  • Cowell e Holdings reported its revenue rose 18% in the first half of the year, while its profit rose at nearly twice that rate, up 33.4%
  • The optical module maker is trying to diversify beyond its heavy reliance on Apple, but with little progress so far

If finding your way into Apple’s (NASDAQ:AAPL) supply chain is the holy grail for electronic component makers, then Cowell e Holdings Inc. (1415.HK) has found a special place in that hallowed realm.

The optical module maker’s financial results for the six months to June, announced earlier this month, show its profit rose 33.4% year-over-year to $89.87 million during the period. Its revenue increased by 18% to $1.61 billion, driven by rising shipments of its high-end products as it works to improve its product mix.

But the most notable thing about the report is the share of Cowell’s sales going to its largest customer, widely known to be Apple, which rose from an already high 98.1% in the first half of 2025 to an even higher 99.3% in the latest period. That’s not really a surprise, since Apple has consistently accounted for more than 90% of Cowell’s revenue since 2018.

Investors didn’t seem to mind the near-total reliance on Apple, perhaps even applauding it, as the company’s shares rallied 8% the day after the release of the latest report.

Hooked on Apple

While Cowell’s reliance on Apple has grown, other major companies in the tech giant’s supply chain have moved in the opposite direction. A case in point is iPhone glass supplier Lens Technology (6613.HK) whose revenue from Apple fell from over 70% of its total in 2022 to 45% last year. Similarly, Apple’s contribution to Luxshare’s (2475.HK; 002475.SZ) revenue dropped from 75% in 2023 to 57% in 2025.

Originally listed in South Korea, Cowell entered Apple’s supply chain more than a decade ago in 2009. It was later taken private by its controlling shareholder before pivoting to a Hong Kong listing in 2015. It remained a rather unremarkable industrial stock for years, with its shares languishing in penny territory.

But 2020 marked a watershed for the company. As many Japanese and South Korean peers curtailed or suspended production when the pandemic began, Cowell scooped up a massive influx of Apple orders, catapulting its earnings for the first half of that year by a staggering 33 times. In December, Luxvisions Innovation, an affiliate of Luxshare, acquired nearly 45% of Cowell to become its controlling shareholder, sending the stock soaring.

Luxshare has long been a fixture in Apple’s supplier network. The Cowell acquisition generated substantial synergies, fueling explosive growth in Apple orders and propelling Cowell’s stock from just over HK$1 in early 2020 to a peak of more than HK$40 last year.

Relying on a single client for years is undeniably a double-edged sword. With Apple’s backing, massive order volumes are guaranteed, and Cowell’s performance and share price reliably get a boost during each new product launch and upgrade cycle. The company’s technology and interests are deeply intertwined with Apple’s. Its sophisticated production lines are tailor-made to meet Apple’s stringent standards, creating a formidable economic moat in the optical module industry that it won’t easily lose in the near term.

Downside potential

Then there are the negatives. Any sneeze from Apple in response to slowing product sales, antitrust fines or other headwinds could result in a major cold for Cowell. Moreover, Apple tends to sign up multiple suppliers for its individual components to mitigate risk. And when doing business with a tech juggernaut wielding such strong pricing power, suppliers often find their profit margins getting squeezed.

In the past, management has rarely discussed looking for new clients to reduce its reliance on Apple. But the recent AI boom has made cameras indispensable portals for receiving data input, making highly sophisticated optical modules important in a wide range of applications, including robotics and autonomous driving.

In the outlook section of its report, Cowell’s management noted that optical modules are not merely essential functional components for end products, but serve as a critical foundational capability enabling environmental perception and data collection for an array of smart devices. As a result, the company is closely watching industry trends in emerging forms of smart terminals for potential new opportunities.

A prime example is the company’s recent push into light detection and ranging (LiDAR) products, which could represent an important diversification step. LiDAR has wide-ranging applications, spanning autonomous driving, meteorological observation and facial recognition. Cowell previously partnered with leading automotive LiDAR provider RoboSense to establish a joint venture, Luxsense, signaling a joint foray into the automotive LiDAR market. While that move has been seen as the company’s attempt to develop a second growth curve outside Apple, it has yet to yield any material revenue contribution so far.

Lowly valued

While Cowell’s business is closely tied to Apple’s fortunes, shares of the two companies have hardly moved in lockstep. Apple’s stock has surged past the $300 mark to an all-time high in recent months. But since reaching a new peak above HK$40 last September, Cowell’s shares have retreated by roughly half to hover near HK$20, only recently rebounding on the back of its strong midyear report.

In terms of its valuation compared with other Hong Kong-listed Apple suppliers, Cowell trades at a trailing price-to-earnings (P/E) ratio of just 11, far below Lens Technology’s 30 and Luxshare’s 23. That discount likely reflects Cowell’s smaller operational scale and its heavy reliance on a single customer.

Nevertheless, the brokerage community is broadly positive on the company after the latest earnings release. JPMorgan pointed out that Cowell’s recent share underperformance reflects investor concerns over weak demand and product pricing pressures. Emphasizing that its current valuation is 40% below historical averages, the investment bank expects the company’s strong earnings growth to provide some upside for the stock, maintaining a "buy" rating.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.