Apple component suppliers took a share-price hit on Wednesday after the world’s biggest technology company said that its $999 iPhone X would be launched later than expected.
The UK’s Dialog Semiconductor and IQE, which sell chips and parts to Apple for its smartphone, headed lower as trading opened.
IQE, the semiconductor maker, fell more than 6 per cent, while Dialog, which draws about three-quarters of its revenues from Apple, was down 1.2 per cent. AMS, an Austrian chip maker that this week touched all-time highs, fell 3.9 per cent.
The iPhone X, Apple’s “super premium” handset, will not be available until November, compared with the company’s usual September releases, as planned for the iPhone 8 and 8 Plus, which was also announced on Tuesday. The X boasts a number of new features, including facial recognition.
The trading highlighted the dependence of a global ecosystem of businesses on the Californian company and an associated rise in market volatility around its announcements. Analysts also noted that almost every feature revealed by Apple on Tuesday relied on custom chips that it designs in-house, suggesting it would be reducing its use of outside suppliers in future.
In Asia, Apple supplier Taiwan Semiconductor Manufacturing, the world’s biggest contract chipmaker, dropped 0.5 per cent. In China, other Apple-linked stocks fell.
In New York, Apple’s own shares were 0.8 per cent lower at the close on Tuesday. They have risen nearly 40 per cent so far in 2017.
“Companies live and die by their relationship with Apple,” said Ben Wood, an analyst at CCS Insight, who suggested that the market move was linked to “some expectation built into the volume of components that would be sold . . . that failed to materialize.
He added that the issue only stood to affect the stock prices of suppliers in the near term, pointing to “pent-up demand”. “The biggest challenge will be satisfying the huge demand for iPhone X,” he said.
Analysts at Peel Hunt said the iPhone X’s face-scanning camera “marks the real start of adoption of VCSEL [Vertical-cavity surface-emitting laser] technology in the mass-market”, leaving IQE well positioned as the “dominant outsourced player”.
Imagination Technologies, which makes graphics processing units, is a case study for the risks facing Apple suppliers. The company lost more than half its market value in a single day in April, when Apple, its largest customer, revealed it was developing its own version of the technology.
The company fell 4.7 per cent on Wednesday after Apple said it had designed its own GPU that will be used in the iPhone X, providing clarity over the shift.
Analysts were bullish on the release of Apple’s new technology but pointed to risks surrounding the delay.
“While we like features in the iPhone X . . . and think the $999 price is fair, we see November 3 availability putting [December quarter] estimates at risk,” said Angelo Zino, an analyst at CFRA Research.
Analysts at RBC Capital Markets argued that “the excitement surrounding the new form factor/features . . . should enable one of the strongest iPhone cycles in recent years.”
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Longer term, Apple’s suppliers face a squeeze from it making more and more of its own components.
Apple has been expanding its in-house chip design team for several years, promoting its chief Johny Srouji to its executive team in late 2015.
In a smartphone market where every company relies on thousands of external component suppliers, Apple’s in-house silicon team is unusual in its scale and resources. The ability to develop dedicated processors to power particular features, from the Apple Watch’s fitness tracker to the wireless connections in its AirPods, is seen as a key differentiator. To know more about it please visit: personalized iPhone cases
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