CUPERTINO, CALIFORNIA – SEPTEMBER 12: The brand new iPhone 15 Pro is displayed during an Apple event on the Steve Jobs Theater at Apple Park on September 12, 2023 in Cupertino, California.
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Shares of Apple suppliers fell in Asia on Wednesday after Barclays downgraded the iPhone maker on concerns that demand for its products would remain weak in 2024.
Taiwan Semiconductor Manufacturing Company fell greater than 2% in Wednesday morning trading. TSMC is a top producer of the world’s most advanced processors for firms similar to Apple and Nvidia.
One other major Apple supplier Hon Hai Technology Group, also generally known as Foxconn, dropped 1.33%. Taiwan-based Foxconn is the world’s largest contract electronics maker and assembles Apple’s iPhones.
Technology and chip stocks including Samsung Electronics and SK Hynix dropped greater than 2%, while LG Electronics fell 1.78%, dragging South Korea’s Kospi lower 1.85%.
“We’re seeing that suppliers are still seeing robust growth on the iPhone 15. We’re in the midst of a supercycle,” said Ray Wang of Silicon Valley-based Constellation Research on CNBC’s “Street Signs Asia.”
“There’s still 200 to 300 million iPhones that get replaced onto 5G, a minimum of for the subsequent 24 months, so I’m undecided precisely the downgrade on growth, but on valuation, I can understand perhaps that is where the hit might be,” Wang told CNBC on Wednesday.
On Tuesday, Barclays downgraded Apple’s stock to underweight and trimmed its price goal to $160 from $161, citing weakness in iPhone 15 sales, signaling likely lower demand for iPhone 16 and other products. Apple shares closed 3.58% lower on Tuesday.
“We’re still picking up weakness on iPhone volumes and blend, in addition to a scarcity of bounce-back in Macs, iPads and wearables,” said analyst Tim Long on Tuesday, in a note to clients.
UBS in a Jan. 3 report said that TSMC was “poised for a powerful rebound in 2024” and maintained a buy rating despite trimming its price goal to 750 Taiwan dollars from 760 Taiwan dollars.
“We predict TSMC is in a sweet spot for growth over the subsequent 18 months from its very high share on 4-nanometer and 3-nanometer and leverage to builds on cloud AI plus positioned to learn from any rise in edge AI lifting large endpoint markets of PC, smartphone and IoT,” said UBS.
– CNBC’s Shreyashi Sanyal contributed to this report.