May 3, 2017 10:25 pm JST

Shares in Apple suppliers boosted by new iPhone hopes

Investors shrug off lukewarm sales in current quarter

CHENG TING-FANG, Nikkei staff writer

TAIPEI -- Most of the shares in Apple's key suppliers in Asia closed higher on Wednesday despite an unexpected fall in iPhone unit sales in the second quarter.

Apple reported Tuesday that sales of iPhone units fell 0.8% in the second quarter ended April 1, although revenue rose 1.2% in the period. Furthermore, Apple's revenue forecast for the current quarter of $43.5 billion to $45.5 billion is below analysts' estimates of $45.7 billion.

Apple shares fell on the news, but the stocks of Taiwan-based suppliers shrugged off the mixed report. Shares in major iPhone assembler Hon Hai Precision Industry advanced 0.5% to close at 100.5 New Taiwan dollars ($3.34), the highest in almost three years. Shares in its smaller rival Pegatron closed unchanged at NT$90.

Hon Hai and Pegatron shares have gained 19.36% and 16.49% so far this year, as they gear up for expected big orders for the upcoming 10th anniversary iPhone range that may feature a premium handset with a curved display.

Taiwan Semiconductor Manufacturing Co., the exclusive supplier of iPhone processor chips, closed up 0.76% at NT$198 on Wednesday. It is now the most valuable Taiwanese company with a market capitalization of NT$5.13 trillion.

TSMC's co-Chief Executive Mark Liu said mid-April that although his company saw inventory correction in the current quarter, the demand for premium smartphones would return in the second half of this year.

Shares of iPhone's camera lens provider Largan Precision, the company with the highest stock price in Taipei, edged up 0.4% to NT$5,020. They have gained more than 32% this year.

Two key metal casing supplier to Apple, Catcher Technology and Foxconn Technology (a Hon Hai affiliate), both saw their stock prices close higher 0.81% and 0.33% at NT$311 and NT$92 respectively. Catcher shares have climbed more than 39% this year while those of Foxconn Tech are up nearly 8% over the same period.

Macbook maker Quanta Computer's shares also added 1.11% on Wednesday at NT$63.5, for a 5% rise this year.

Despite a 4.61% fall in Apple's touch module supplier TPK Holding's shares to NT$103.5 on Wednesday, its stock price has gained almost 74% so far this year.

"The robust performance by Apple suppliers' shares is expected to last till a few weeks before Apple really launches its anniversary phone," said Jeff Pu, an analyst at Yuanta Investment Consulting. "Investors do not care about the lukewarm demand in the first half of this year ... everyone is eyeing the healthy cycle for the second half of 2017."

However, Pu says some delay in delivery of the next generation of iPhones is expected and his company has cut forecast for whole-year shipments to 230 million, from 235 million previously.

Elsewhere in Asia

Apple's major panel supplier LG Display of South Korea saw its stock price rise 0.68% to 29,600 won ($26.20) while that of its rival Japan Display Inc. fell 6.15% to 229 Japanese yen ($2.04) on Wednesday.

JDI's shares have plunged more than 31% so far this year and those of LG Display decreased nearly 6% in the same period.

Both companies would receive fewer orders from Apple this year as the premium model of the new iPhone will adopt flexible organic light-emitting diode display.

Samsung Display, a subsidiary of Samsung Electronics, is the only company in the world that can produce curved OLED screens in large quantities. It will become the sole panel supplier for the new premium iPhone 8 model.

Shares in Samsung Electronics, Apple's key supplier of memory chips, went up 0.63% to 2,245,000 won on Wednesday. They have increased nearly 25% so far this year.

Samsung posted the highest ever figure for net profit at the end of April for the January-March period, boosted by robust semiconductor and display sales. Samsung is also Apple's biggest rival in the global smartphone market.

SK Hynix, another memory chip provider to Apple, also saw its stock price move up 2.59% to 55,400 won on Wednesday. They have already advanced nearly 24% this year.

Asia300

Taiwan Semiconductor Manufacturing Co., Ltd.

Taiwan

Market(Ticker): TAI(2330)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 203,946.34M
Shares: 25,930.38M
Asia300

LARGAN Precision Co., Ltd.

Taiwan

Market(Ticker): TAI(3008)
Sector:
Industry:
Electronic Technology
Electronic Components
Market cap(USD): 24,854.35M
Shares: 134.14M
Asia300

Catcher Technology Co. Ltd.

Taiwan

Market(Ticker): TAI(2474)
Sector:
Industry:
Producer Manufacturing
Metal Fabrication
Market cap(USD): 7,755.82M
Shares: 770.39M
Asia300

Quanta Computer, Inc.

Taiwan

Market(Ticker): TAI(2382)
Sector:
Industry:
Electronic Technology
Computer Processing Hardware
Market cap(USD): 9,248.35M
Shares: 3,862.62M
Asia300

TPK Holding Co. Ltd.

Taiwan

Market(Ticker): TAI(3673)
Sector:
Industry:
Electronic Technology
Electronic Components
Market cap(USD): 1,323.73M
Shares: 406.63M
Asia300

Samsung Electronics Co., Ltd.

South Korea

Market(Ticker): KRX(005930)
Sector:
Industry:
Electronic Technology
Telecommunications Equipment
Market cap(USD): 349,582.63M
Shares: 148.18M
Asia300

SK hynix, Inc.

South Korea

Market(Ticker): KRX(000660)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 53,676.10M
Shares: 728.00M

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