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Suppliers fear of peak iPhone

Reuters / Share:

TAIPEI/SEOUL (Reuters) – Shares in Asian suppliers and assemblers for Apple Inc 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.

Fresh warnings on Monday from screen maker Japan Display Inc, British chipmaker IQE Plc and Lumentum Holdings Inc, the main supplier of the Face ID technology in the latest generation of iPhones, hurt technology stocks in Asia yesterday.

Taiwan-based assembler Hon Hai Precision Industry Co Ltd (Foxconn) dropped more than 3 percent. Rival Pegatron Corp 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, fell 2.6 percent, while Flexium Interconnect Inc 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.

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.

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