- tech360.tv
Apple Suppliers Slide on China Anxiety, Threat from Huawei
Updated: Jan 8
Apple suppliers are experiencing a decline in stock prices due to concerns over China's restrictions on iPhone usage by government employees and the growing competition from Huawei.
The widening curbs on iPhone use have intensified fears of a negative impact on Apple and its suppliers amid rising tensions between the US and China.
In the past two days, Apple shares have dropped by 6.4%, resulting in a $190 billion decrease in market capitalization. However, some Wall Street analysts believe that the sell-off is exaggerated and that any potential revenue loss for Apple would be minimal due to the popularity of iPhones in China. As a result, Apple shares rebounded by 1.3% in Friday trading.
Huawei, a Chinese tech giant, has launched two new smartphones, the Mate X5 and the Mate 60 Pro+, which have garnered global attention for their resilience to US sanctions. Analysts speculate that these moves by Huawei could be the first step in its comeback efforts to rival Apple, especially after gaining market share following US sanctions imposed four years ago. Apple is set to release a new iPhone soon, following a weak quarter for sales of its flagship product.
China has been a significant market for Apple, ranking as its third-largest market after the Americas and Europe. Huawei's smartphone business suffered greatly after the US restricted tech exports to the company in 2019. Apple's sales in China have been boosted this year by rare deals offered by third-party retailers, which provided discounts of up to 10% on the iPhone 14 Pro. However, analysts suggest that these discounts may undermine sales of Apple's upcoming products.
In Taipei, Apple supplier Largan Precision, known for manufacturing camera lenses, saw a drop of over 4% in its stock price, while contract chipmaker TSMC fell by 0.6%. China's Luxshare Precision Industry, which owns factories capable of producing iPhones, also experienced a 2% decline in its stock price. On the other hand, US-based Apple suppliers, such as Qualcomm and Broadcom, saw little change in their stock prices.
Meanwhile, Huawei suppliers have seen recent gains. Semiconductor Manufacturing International Corp (SMIC), believed to have manufactured the advanced chip in Huawei's new smartphone, saw a 0.7% increase in its stock price.
It remains unclear how extensive China's curbs on iPhones are.
An employee from an affected state-owned enterprise (SOE) in Beijing stated that the curbs extended to visitors as well. However, some employees from other SOEs claimed they had not been banned from using iPhones. The ban on central government employees using iPhones could potentially reduce iPhone sales by 5 million to 10 million units per year out of China's annual total of up to 50 million.
Analysts suggest that the curbs on iPhones demonstrate that even a company with a significant presence in China and good government ties is not immune to the escalating tensions between the US and China. Apple has already shifted some of its production out of China due to COVID-19 restrictions.
Apple suppliers are experiencing a decline in stock prices due to concerns over China's restrictions on iPhone usage by government employees and the growing competition from Huawei.
Apple shares dropped by 6.4% in the past two days, resulting in a $190 billion decrease in market capitalization.
Some Wall Street analysts believe that the sell-off is exaggerated and that any potential revenue loss for Apple would be minimal due to the popularity of iPhones in China.
Source: Reuters