Apple tide will lift fewer Asian supply boats

Catcher Technology Co

23/02/2018 03:19

(The author is a Reuters Breakingviews columnist. The opinions 
expressed are her own.) 
    By Robyn Mak 
    HONG KONG, Feb 23 (Reuters Breakingviews) - Apple's  AAPL.O  
rising tide will be lifting fewer Asian supply boats. A 
disappointing cycle of iPhone sales has left Foxconn and others 
in the production chain reeling. The especially lofty 
expectations could make recovery harder for many. Some, however, 
should be better positioned to benefit from the sale of fewer, 
but more profitable, handsets. 
    Forecasting demand for Apple products is more art than 
science. The secretive Cupertino, California, giant earlier this 
 month said the iPhone X surpassed expectations. Mixed signals 
from contributing manufacturers have nevertheless escalated 
concerns about production cuts to the $999 smartphone. A Nikkei 
report this week said Samsung Electronics  005930.KS  would 
halve first-quarter production of the Apple device's display 
screens.  
    These worries have weighed on other component makers. Shares 
of $52 billion Foxconn, the Taiwanese iPhone assembler, have 
slumped some 15 percent over the past three months. 
Apple-dependent Largan  3008.TW  and touch-screen technology 
outfit TPK Holding  3673.TW  have lost more than a fifth of 
their market values.  
    Similar skepticism has occurred before, but Apple upgrades 
typically reverse the stock-price trend for suppliers. With 
three new iPhones expected in the second half of 2018, it would 
stand to reason that Foxconn and others might rebound. 
    And yet anticipation for the iPhone X, the first to get a 
major design overhaul since the popular iPhone 6, was unusually 
high. In the nine months to September, ahead of the November 
release, TPK shares had more than doubled. That compared to a 42 
percent rally for Apple's.  
    The fates of Apple and its suppliers have diverged, though. 
That's partly due to the corporate tax cuts passed in 
Washington. Hopes of larger returns of capital to shareholders 
have largely offset the sales setbacks. In addition, the $870 
billion company is bringing more of the production, including 
graphics chips, in-house.  
    Even so, investor pessimism has been somewhat 
indiscriminate. Largan-made 3D camera lenses that enable facial 
recognition and augmented reality should be in high demand for 
Apple's next generation of phones. The same goes for audio parts 
produced by AAC Technologies  2018.HK . They will be pricier for 
newer models and thus able to withstand a dip in volume. Many 
others, though, may get left in Apple's wake.   
    On Twitter https://twitter.com/mak_robyn 
     
    CONTEXT NEWS 
    - Samsung Electronics will halve production of its 
smartphone display screens used by Apple's iPhones, Reuters 
reported on Feb. 20, citing the Nikkei.  
    - The South Korean company plans to make organic 
light-emitting diode panels for up to 20 million iPhones in the 
three months to March, down from the initial goal of 45 to 50 
million iPhones, the Nikkei added, in response to Apple's 
decision to cut production of its iPhone X model amid weak 
demand. 
    - In December 2017, Taiwan's Economic Daily reported that 
Apple would reduce its sales forecast for the iPhone X in the 
first quarter of calendar year 2018 to 30 million units, down 
from 50 million.       
    - For previous columns by the author, Reuters customers can 
click on  MAK/    
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    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
Samsung Elec to slash OLED panel production as iPhone X demand 
disappoints     urn:newsml:reuters.com:*:nL4N1QA16Z 
BREAKINGVIEWS - Apple, suppliers drop on report of weak iPhone X 
demand     urn:newsml:reuters.com:*:nL4N1OQ37C 
BREAKINGVIEWS - Apple's less-is-more vibe bodes well for profit  
   urn:newsml:reuters.com:*:nL2N1PR1BH 
BREAKINGVIEWS - Apple's iPhone factory placed briefly on hold    
 urn:newsml:reuters.com:*:nL1N1NL032 
Graphic: Shares of the iPhone maker and its Taiwanese suppliers 
have diverged    http://reut.rs/2CDK4uP 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Editing by Jeffrey Goldfarb and Katrina Hamlin) 
 ((robyn.mak@thomsonreuters.com;)(Reuters Messaging: 
robyn.mak.thomsonreuters.com@reuters.net)) 
 
Keywords: APPLE SUPPLIERS/BREAKINGVIEWS