Important Points
- Following Barclays’ downgrading of Apple due to fears about sluggish demand, shares of Apple suppliers fell on Wednesday in Asia.
- The sophisticated processor manufacturer used in Apple products, TSMC, saw a more than 2% decline on Wednesday morning. Foxconn, an iPhone assembler, saw a 1.33% decline on Wednesday morning.
- The majority of semiconductor and technology stocks fell as well, including those of Samsung Electronics, SK Hynix, and LG Electronics.
After Barclays downgraded the iPhone manufacturer because to concerns that demand for its goods would remain poor in 2024, shares of Apple suppliers tumbled on Wednesday in Asia.
In early trade on Wednesday, Taiwan Semiconductor Manufacturing Company saw a decline of more than 2%. TSMC is a leading manufacturer of the most cutting-edge CPUs available, serving clients like Nvidia and Apple.
Foxconn, also known as Hon Hai Technology Group, a significant Apple supplier, saw a 1.33% decline. Apple’s iPhones are assembled by Taiwan-based Foxconn, the largest contract electronics manufacturer in the world.
Technology and chip stocks tumbled more than 2% for Samsung Electronics and SK Hynix, and dragged down 1.85% on the South Korean Kospi was LG Electronics, which sank 1.78%.
“Suppliers continue to report strong growth with the iPhone 15,” Ray Wang of Constellation Research, based in Silicon Valley, stated, “We’re in the middle of a supercycle” on CNBC’s “Street Signs Asia.”
Wang said to CNBC on Wednesday, “I’m not sure exactly the downgrade on growth, but on valuation, I can understand maybe that’s where the hit will be. There are still 200 to 300 million iPhones that get replaced onto 5G, at least for the next 24 months.”
Barclays downgraded Apple’s shares to underweight on Tuesday and lowered its price estimate from $161 to $160, citing disappointing sales of the iPhone 15, which suggests that there will likely be less demand for the iPhone 16 and other goods. On Tuesday, Apple’s stock finished 3.58% down.
In a note to clients on Tuesday, analyst Tim Long stated, “We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads, and wearables.”
In a research published on January 3, UBS stated that TSMC was “poised for a strong rebound in 2024” and upheld its buy rating, even though it had lowered its price objective from 760 Taiwan dollars to 750 Taiwan dollars.
“With its very high share on 4-nanometer and 3-nanometer and leverage to builds on cloud AI plus positioned to benefit from any rise in edge AI lifting large endpoint markets of PC, smartphone, and IoT, we think TSMC is in a sweet spot for growth over the next 18 months,” UBS stated.