Fears of peak iPhone rattle Asian Apple suppliers (updated)

LG Innotek Co

13/11/2018 06:48

* iPhone demand has likely peaked in key markets - analysts
    * Lack of tech breakthroughs hurting iPhone sales - analysts
    * Taiwan suppliers like Foxconn, TSMC, Flexium fall
    * Hong Kong-based AAC Tech falls
    * South Korea's Samsung Electro-Mechanics, LG Innotek fall

 (Adds analyst, investor comments)
    By Jess Macy Yu and Heekyong Yang
    TAIPEI/SEOUL, Nov 13 (Reuters) - Shares in Asian suppliers
and assemblers for Apple Inc  AAPL.O  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.  urn:newsml:reuters.com:*:nL2N1XC2E1
    Fresh warnings on Monday from screen maker Japan Display Inc
 6740.T , British chipmaker IQE Plc  IQE.L  and Lumentum
Holdings Inc  LITE.O , the main supplier of the Face ID
technology in the latest generation of iPhones, hurt technology
stocks in Asia on Tuesday.
    Taiwan-based assembler Hon Hai Precision Industry Co Ltd
(Foxconn)  2317.TW  dropped more than 3 percent. Rival Pegatron
Corp  4938.TW  fell more than 5 percent but later recouped
losses. Both companies count Apple as a major customer. 
    The world's largest contract chipmaker, Taiwan Semiconductor
Manufacturing Co  2330.TW , fell 2.6 percent, while Flexium
Interconnect Inc  6269.TW  was down 1.5 percent. The Taiwan
Weighted Index  .TWII  was down around 1.6 percent.
    "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 Cupertino, California-based tech giant's shares fell to
their lowest level in more than three months on Monday.
 urn:newsml:reuters.com:*:nL4N1XN4QW 
    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.
 urn:newsml:reuters.com:*:nL4N1XN4PG urn:newsml:reuters.com:*:nL4N1XK2MB urn:newsml:reuters.com:*:nL4N1XN59M
    
    NO CONFIDENCE
    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
 2018.HK  slumped more than 6 percent. 
    South Korean electronic parts suppliers Samsung
Electro-Mechanics Co Ltd  009150.KS , Apple's supplier of
multi-layer ceramic capacitors, dropped more than 5 percent,
while LG Innotek Co Ltd  011070.KS  plunged 9.5 percent.
    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.
    The move led analysts to question the company's business and
its share price has since dropped 12.6 percent.  urn:newsml:reuters.com:*:nL2N1XD00Q
    "(This) indicates that the company itself is not confident
about its performance at the moment," said Park Jung-hoon, a
fund manager at HDC Asset Management, which owns Samsung
Electronics shares.
    "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," he said.
    

 (Reporting by Jess Macy Yu in Taipei and Heekyong Yang in
Seoul; Additional reporting by Yimou Lee; Editing by Sayantani
Ghosh and Stephen Coates)
 ((yimou.lee@thomsonreuters.com; +886-909-894-919; Reuters
Messaging: yimou.lee.reuters.com@reuters.net / Twitter: https://twitter.com/YimouLee))