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Fears of iPhone peaking rattle Apple suppliers in Asia

Fresh result warnings from several component makers hurt tech stocks

Taipei

SHARES in Asian suppliers and assemblers for Apple Inc fell on Tuesday after several component makers warned of weaker-than-expected results, leading some market watchers to call the peak for iPhones in several key markets.

Following a poor forecast earlier this month, analysts and investors voiced concern over the state of Apple's business, contributing to growing worries that iPhone sales were stagnating and could hurt suppliers.

Fresh warnings on Monday from screen maker Japan Display Inc, British chipmaker IQE plc and Lumentum Holdings Inc, the main supplier of the Face ID technology in the latest generation of iPhones, hurt technology stocks in Asia on Tuesday.

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Taiwan-based assembler Hon Hai Precision Industry Co Ltd (Foxconn) dropped more than 3 per cent. Rival Pegatron Corp fell more than 5 per cent but later recouped losses. Both companies count Apple as a major customer. Taiwan Semiconductor Manufacturing Co fell 2.6 per cent, while Flexium Interconnect Inc was down 1.5 per cent. The Taiwan Weighted Index was down around 1.6 per cent.

"Apple's iPhone weakness has been a long-term issue for the Asia supply chain," said Arthur Liao, an analyst at Fubon Research in Taipei. "For Apple, the iPhone shipment has reached its peak. For tech suppliers facing the future, they have no other big client like Apple."

The tech giant's shares fell to their lowest level in more than three months on Monday. Last week a media report saying the iPhone maker had told its smartphone assemblers to halt plans for additional production lines dedicated to its new lower-priced iPhone XR had pressured supplier stocks.

Analysts said the lack of technological breakthroughs had put a cap on demand, which would persist in the coming quarters. "With no new technology in sight next year for the supply chain, this is not ideal for the companies involved," said Nicole Tu, a Taipei-based analyst at Yuanta Investment Consulting. "Up through the first half of 2019 we likely won't see any breakthrough."

Lumentum on Monday slashed its profit and revenue forecast for the current quarter, while IQE warned that current-year results would be lower. Japan Display lowered both sales and margin outlook for the year as well.

Apple warned earlier this month that holiday sales would miss Wall Street expectations due to weakness in emerging markets including India and foreign-exchange costs. Among other Apple suppliers in Asia, Hong Kong-based acoustic components maker AAC Technologies Holdings Inc slumped more than 6 per cent. South Korean electronic parts suppliers Samsung Electro-Mechanics Co Ltd, Apple's supplier of multi-layer ceramic capacitors, dropped more than 5 per cent, while LG Innotek Co Ltd plunged 9.5 per cent.

Apple said earlier this month it would stop giving the number of iPhones, iPads and Mac computers it sold in a quarter, a closely watched metric and a key indicator of the company's success. REUTERS