Apple’s supply chain stocks, Broadcom, Taiwan Semiconductor Manufacturing, and Arm Holdings, all experienced a significant drop in their share prices on Monday. The reason behind this sudden decline? A renowned Asia-based Apple analyst reported weaker-than-expected initial orders for the upcoming iPhone 16. This news sent shockwaves through the market and led to a domino effect, causing all three stocks to tumble in sympathy. The million-dollar question looming over everyone’s heads – Is the long-anticipated iPhone “Supercycle” turning out to be a bust?
Let’s delve deeper into the analysis and insights provided by the TF International Securities analyst Ming-Chi Kuo. Kuo’s blog post highlighted a rather pessimistic outlook for the iPhone 16 based on early supplier checks and pre-order data. Shockingly, the estimated preorder sales for Apple’s latest iPhone model amounted to just 37 million, representing a 12.7% decrease from the previous year. The difference was primarily attributed to lower preorders for the “Pro” model, possibly due to the delayed introduction of Apple’s groundbreaking AI platform, Apple Intelligence.
The absence of Apple Intelligence features at launch may have contributed to lukewarm preorders for the Pro model, coupled with the challenging Chinese market conditions and stiff competition. Despite China being a significant revenue contributor for Apple, accounting for 17.2% of total earnings last quarter, it seems that various factors have dampened iPhone sales prospects in the region.
Amidst the iPhone frenzy, investors should keep in mind that rumors tend to swirl around Apple products during this time of year. While some analysts’ predictions pan out, others fall flat, creating speculation and uncertainty in the market. Additionally, the current high short-term interest rates might be dissuading consumers from making substantial purchases, like the latest iPhone, until the need arises.
Looking ahead, the rollout of Apple Intelligence and expected interest rate cuts could serve as catalysts for the iPhone during the upcoming holiday season. Despite the temporary setback in preorders, there is optimism regarding the long-term growth potential of these Apple suppliers beyond the iPhone realm. Broadcom’s networking chips for AI data centers, Arm Holdings’ edge AI data center penetration, and TSMC’s robust August sales attributed to AI-related data center GPU orders, all point towards a promising future.
In conclusion, while the recent dip in stock prices for Broadcom, Taiwan Semiconductor Manufacturing, and Arm Holdings may raise concerns, it is crucial to consider the broader landscape and potential growth avenues for these companies. Investors should not be swayed by short-term noise but rather focus on the long-term prospects and evolving technologies that could shape the future of these key players in Apple’s supply chain.
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