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Equities

Apple-linked stocks slide on dull iPhone X sales

Slumping heavyweight suppliers limit broader market's upside

Investors have soured on Apple suppliers as iPhone X sales disappoint.

TOKYO -- The share prices of Apple's component and production machinery suppliers worldwide have tumbled amid lackluster sales of the iPhone X.

The market had high hopes for the iPhone X, released late last year, as the newest Apple smartphone features an organic light-emitting diode display. But sales have been slow in China and elsewhere, with the high price tag among the likely culprits. The phone in the U.S. starts at $999.

A U.S. securities brokerage expects Apple to end iPhone X production this year. Japan's Nomura Securities lowered its forecast Wednesday for the product shipments in the January-June half.

Apple stock has fallen 2.4% from the end of last year, while the Dow Jones Industrial Average has tested new highs of late. Investors are seeing the limit of Apple's strategy to count on a shift to high-end smartphones, Seiichiro Iwamoto of Asset Management One said.

Parts suppliers are taking a hit as well. JPMorgan Securities Japan lowered its assessment of Sony from "buy" to "neutral" on Wednesday. The share price for the Japanese producer of image sensors used in smartphones declined more than 3% for two days in a row through Thursday, with its turnover totaling the second highest on the Tokyo Stock Exchange's first section.

Alps Electric, which makes image stabilizers, has dipped 4.8% since the end of last week to hit a three-month low Thursday. Semiconductor producer Rohm has declined 3.4% over the same period, while Fanuc slid nearly 4%. The industrial robot company makes compact machining centers used in iPhone production. Japan Aviation Electronics Industry, which makes connectors used in communication equipment, declined 3.1%.

South Korea's Interflex, which manufactures flexible printed circuit boards, has plunged 18.1% since the end of last week, while U.S. company Texas Instruments dropped 6.1%. Hon Hai Precision Industry, the Taiwan-based assembler of iPhones, slid 1.5% in that time.

Many Apple suppliers have a large market capitalization, magnifying their influence on the broader market. The Nikkei Stock Average fell Thursday for a second straight session, by 1.1% to 23,669, as Apple-related shares like Kyocera and Fanuc sank.

But liquid crystal display companies have proved an exception to the trend. Apple may continue to employ low-price LCD panels in a portion of its lineup due out as early as fall, which brightens the outlook for the panel suppliers. Japan Display, LG Display and others have enjoyed stock gains since mid-January, defying earlier concerns about order declines.

Apple announces October-December earnings Feb. 1. If the company's sales volume outlook is less pessimistic than the market forecast, investors may take a second look at Apple-related shares, said Yasuhiko Hirakawa at Sumitomo Mitsui Asset Management.

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