iPhone suppliers take a tumble
Shares in Apple's partners slip on reports of cuts in component orders for first quarter
Shares in Hon Hai Precision Industry, AAC Technologies and Apple's other key suppliers in Asia tumbled yesterday following reports that orders for iPhone 5 components had been cut.
Citing industry sources, Japan's Nikkei and the Wall Street Journal separately reported on Monday that Apple reduced by nearly half its first-quarter orders for high-resolution iPhone 5 screens from suppliers Sharp, LG Display and privately held Japan Display.
That news sent the shares of California-based Apple, the world's largest technology company, diving to US$498.51 in early trading on the Nasdaq Stock Market on Monday before closing at US$501.75, down 3.6 per cent. It was the first time in 11 months that the stock fell below US$500.
Taiwan-based Hon Hai, Apple's primary manufacturing contractor for the iPhone and iPad, saw its shares finished down 3.44 per cent yesterday at NT$84.20 (HK$22.52), their lowest close since reaching NT$84 on October 25 last year.
AAC, a Shenzhen manufacturer of mini-speaker components for the iPhone 5, fell more than 4 per cent in Hong Kong before ending at HK$27.90, dropping 2.79 per cent.
Shares in Sharp lost 2.73 per cent in Tokyo while LG Display slid 3.46 per cent in Seoul.
Barclays analyst Jones Ku said in a Bloomberg report that the first-quarter cutback was "exaggerated".
NPD Display Search analyst Paul Semenza told The New York Times that Apple's order was trimmed to between 11 million and 14 million screens, from the previous 19 million, either in response to excess inventory or because iPhone 5 sales were less than the company projected.
Bernstein Research senior analyst Alberto Moel said Hon Hai, the world's largest electronics manufacturing services provider, could see "a single-digit revenue decline, based on the reported component shipment reductions" in the first two quarters of this year.
Hon Hai owns and operates dozens of electronics manufacturing subsidiaries, collectively known under the trade name of Foxconn Technology Group. This includes Hong Kong-listed Foxconn International Holdings and Taiwan-listed firms Foxconn Technology and Foxsemicon Integrated Technology.
Moel said Hon Hai's "margins will be stronger than previously expected this year" due to improved productivity at its mainland plants and an increase in parts that it supplies for Apple products.
The Taiwanese company's revenue is forecast to reach NT$4.7 billion this year, up from an estimated NT$3.89 billion last year. It is projected to produce 140.78 million iPhones this year, compared with 114.08 million units last year.