Shares of Apple suppliers in Asia fell as Barclays downgraded the iPhone maker, citing concerns about weak demand for its products in 2024.
Barclays Downgrades Apple, Stocks Drop
Shares of Apple suppliers in Asia fell after Barclays downgraded the iPhone maker on concerns about weak product demand in 2024. Taiwan Semiconductor Manufacturing Company (TSMC), a major producer of advanced processors for Apple and Nvidia, dropped more than 2%. Another key supplier, Hon Hai Technology Group (Foxconn), also saw a 1.33% decrease. Shares of other technology and chip stocks in South Korea, such as Samsung Electronics, SK Hynix, and LG Electronics, dropped more than 2% as well.
Analyst Predicts 5G iPhone Replacement Cycle
Despite the downgrade, analyst Ray Wang of Constellation Research mentioned that iPhone suppliers are still experiencing strong growth due to the ongoing 5G iPhone replacement cycle. Wang estimated that 200 to 300 million iPhones would be replaced with 5G models over the next 24 months, contributing to solid demand for iPhone 15. This contradicts Barclays’ concerns about weakening iPhone sales and signals lower demand for future iPhone models.
Barclays’ Downgrade and Impact on Apple
Barclays downgraded Apple’s stock to underweight and reduced its price target from $161 to $160, attributing the decision to weakness in iPhone 15 sales and anticipated lower demand for iPhone 16 and other products. The downgrade contributed to a 3.58% drop in Apple shares. Analyst Tim Long mentioned weakness in iPhone volumes and mix, as well as a lack of recovery in Macs, iPads, and wearables, echoing concerns about Apple’s product demand.
TSMC’s Outlook Despite Downgrade
Contrary to the downgrade, UBS released a report highlighting TSMC’s potential for a strong rebound in 2024, maintaining a buy rating while slightly reducing the price target. UBS views TSMC favorably for its position in the 4-nanometer and 3-nanometer market, potential growth in cloud AI, and opportunities in PC, smartphone, and IoT markets. Despite the concerns raised by Barclays, UBS remains optimistic about TSMC’s growth prospects.