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Stocks plunge as Apple component manufacturers predict weak results

Apple

Shares of Apple’s Asian parts manufacturers and assemblers took a nose-dive as several component makers warned of weaker than expected results. This has also led to several market watchers call out the peak for Apple iPhones in several critical markets.

This comes after a weak forecast from Apple last month, in which the company laid the blame squarely on emerging markets, including India. Analysts and investors who were already worried at the news, were further stymied by a series of reports from Apple component manufacturers including screen maker Japan Display Inc, British chipmaker IQE Plc and Lumentum Holdings Inc.

The implications of this environment of apprehension regarding the future of Apple’s iPhones, was felt throughout the company’s supply chain – which is primarily based in Asia. Tech stocks that took a nosedive included Taiwan-based assembler Hon Hai Precision Industry Co Ltd (Foxconn) (-3 percent), Pegatron Corp (-5 percent), Taiwan Semiconductor Manufacturing Co (-2.6 percent), and Flexium Interconnect Inc (-1.5 percent).

The Taiwan Weighted Index marked an overall decrease of around 1.6 percent.

Speaking on the topic, Arthur Liao, an analyst at Fubon Research in Taipei told Reuters:

Apple’s iPhone weakness has been a long-term issue for the Asia supply chain. For Apple, the iPhone shipment has reached its peak. For tech suppliers facing the future, they have no other big client like Apple.

Media reports stating that Apple had told its smartphone assemblers to pause plans for additional production lines for the iPhone XR did not help on the slightest, and Apple stock fell to its lowest level in three months, on Monday. Apple’s decision to hide sales numbers for iPhones and iPads did not quite work out in its favor, with analysts gauging it as a lack of confidence.

As per Park Jung-hoon, a fund manager at HDC Asset Management:

(This) indicates that the company itself is not confident about its performance at the moment. Although Apple has positioned itself as a super-expensive handset maker providing high-end products, its strategy has not been working in emerging markets including China and India as Chinese vendors have been making iPhone-like products.

The company really needs a tech/design breakthrough that would convince prospective buyers to continue burning holes in their pockets to pick up the Cupertino based manufacturer’s increasingly expensive iPhones. With markets either being saturated, or captured by competitors that offer similar feature at lower prices, Apple needs to up its game if it wants to maintain its leadership position in the market.

A bibliophile and a business enthusiast.

mudit.m@thetechportal.in


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