Shares of providers of Apple products were down in Asia on Wednesday due to a downgrade of the company by Barclays. TSMC, which manufactures processors for Apple products, declined over 2% on Wednesday morning. Foxconn, an iPhone assembler, dropped 1.33%. Furthermore, many technology and chip stocks including Samsung Electronics, SK Hynix and LG Electronics were also lower.
Stocks of Apple's suppliers dropped in Asia on Wednesday after Barclays downgraded its ratings of the tech giant, citing that demand for its products would stay weak in 2024.Taiwan Semiconductor Manufacturing Company (TSMC) experienced more than a 2% decrease in trading. TSMC fabricates cutting-edge processors for Apple and Nvidia.Hon Hai Technology Group (Foxconn), another chief Apple supplier, also declined by 1.33%. This Taiwan-based company is the biggest contract electronics manufacturer on the planet and its duty is to put together Apple's iPhones.Aside from these two, many technology and chip companies such as Samsung Electronics, SK Hynix, and LG Electronics all experienced drops of more than 2%, pushing South Korea's Kospi down by 1.85%.When asked for his opinion, Ray Wang from Constellation Research in Silicon Valley told CNBC's "Street Signs Asia", "We are seeing that suppliers are enjoying healthy growth on the iPhone 15. We are in the middle of a supercycle. There are still up to 300 million iPhones needing to be refurbished to 5G at least over the next two years, that is why I don't understand the downgrade in growth, although I can get why it might cause a hit in the valuation.”
On Tuesday, Barclays had downgraded Apple's stock to underweight and decreased its price target to $160 from $161, signaling a potential decrease in demand for iPhone 16 and other products. Apple's shares closed 3.58% lower on Tuesday.Analyst Tim Long stated in a note to clients that day, "We are still detecting weak iPhone volumes and mixes, as well as a lack of stand-out performance in Macs, iPads and wearables.”
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UBS maintained a "buy" rating for TSMC on Jan. 3, despite slightly reducing their price target from 760 to 750 Taiwan dollars. They stated that TSMC was "poised for a strong rebound in 2024" due to the high share they have of 4-nanometer and 3-nanometer processes as well as anticipated growth in cloud AI and edge AI in large endpoint markets such as PCs, smartphones, and Internet of Things. Contributing to this report was Shreyashi Sanyal of CNBC.
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