Apple Supplier Shares Decline in Asia Amidst Barclays’ iPhone Downgrade

Apple supplier shares in Asia faced a decline after Barclays, a financial institution, lowered its rating on Apple due to worries about the demand for its products in 2024. One of the key players, Taiwan Semiconductor Manufacturing Company (TSMC), saw its shares drop by over 2% in morning trading on Wednesday. TSMC is a major producer of advanced processors for big companies like Apple and Nvidia.

Another significant Apple supplier, Hon Hai Technology Group, commonly known as Foxconn, also faced a decline of 1.33%. Foxconn, based in Taiwan, is the world’s largest contract electronics manufacturer and puts together Apple’s iPhones.

Apple Supplier Shares Decline in Asia Amidst Barclays’ iPhone Downgrade

The tech and chip sectors, including Samsung Electronics and SK Hynix, experienced more than a 2% decrease, while LG Electronics also fell by 1.78%. This downward trend impacted South Korea’s Kospi index, pushing it down by 1.85%.

Ray Wang, from Constellation Research based in Silicon Valley, noted, “We’re seeing that suppliers are still experiencing strong growth on the iPhone 15. We’re in the middle of a supercycle.” He highlighted that there’s a substantial replacement potential for 5G-ready iPhones, estimating 200 to 300 million units in the next 24 months.

Barclays, however, downgraded Apple’s stock to “underweight” on Tuesday and adjusted its price target to $160 from $161. The downgrade was due to perceived weakness in iPhone 15 sales, hinting at possible decreased demand for iPhone 16 and other Apple products. As a result, Apple’s shares closed 3.58% lower on Tuesday.

Analyst Tim Long expressed concerns about iPhone volumes, product mix, and the performance of Macs, iPads, and wearables in a note to clients on Tuesday.

Meanwhile, UBS, in a report released on January 3, indicated that TSMC might witness a strong comeback in 2024. Despite slightly lowering its price target, UBS maintained a “buy” rating on TSMC.

According to UBS, TSMC’s position in producing processors for cutting-edge technologies and its connection to cloud AI put it in a prime spot for growth over the next 18 months. They highlighted TSMC’s potential benefits from advancements in AI in various devices like PCs, smartphones, and IoT.

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