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Smartphone suppliers slide after Asia peers' earnings disappoint

New York

SMARTPHONE suppliers were among the worst-performing semiconductor stocks on Tuesday after two disappointing earnings reports from peers in Asia alarmed investors.

Apple Inc suppliers Broadcom Inc, Cirrus Logic Inc and Skyworks Solutions Inc fell more than one per cent. They were among the worst performers in the Philadelphia Semiconductor Index, which was little changed in afternoon trading.

Sunny Optical Technology Group, based in Yuyao, China, lost nearly a quarter of its market value on Tuesday after earnings missed estimates.

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That followed a disappointing report from Taiwan-based Hon Hai Precision Industry Co on Monday that showed a surprise decline in second-quarter earnings as profit margins were marred by a boost in sophisticated device production like the iPhone X.

Semiconductor stocks, among the best-performing sectors in the past two years, have been under pressure since Morgan Stanley warned of growing cyclical risks on Aug 8.

Microchip Technology Inc heightened concerns the following day with a weaker-than-expected revenue forecast and a warning on the effects of tariffs.

The Philadelphia Semiconductor Index has fallen more than 3 per cent since Aug 8 and is about 6 per cent shy of a March record.

Even with that, the group of 30 chipmakers and equipment suppliers has gained more than 8 per cent this year after rising 38 per cent in 2017 and 36 per cent in 2016.

US chipmaker Nvidia Corp. and equipment supplier Applied Materials Inc will be scrutinised when they report earnings on Thursday.

The pair will be among the last in the sector to report, with Analog Devices Inc third-quarter results expected on Aug 22. BLOOMBERG