Wall Street is in a panic with the recent 7.1% plummet in three Apple stock trading sessions and the resulting loss of $63.9 billion of shareholder value. The drop was generated by weaker-than-expected guidance by strategic Apple partner and world’s biggest semi-conductor foundry, Taiwan Semiconductor Manufacturing (TSMC). The company stated that its revenue forecast for Q2 of $7.8 billion – $7.9 billion compared to the Wall Street guestimate of $8.8 billion, is due to poor demand in the mobile sector.
It is believed among some industry analysts that TSMC’s weak guidance precedes a stock market and chip sector drop. Key suppliers in Asia are also forecasting a much slower rate of June shipments of iPhones than expected.
This is all just before Apple’s much anticipated March FYQ18 quarter and this all raises concerns that shares of the American multinational’s shares could signify the downfall of the latest period of sustained increases in tech-driven and semi-conductor (SOX) stock. SOX is a primary meter for the general stock market and has been firm for the past two years! It has also been an unrestrained period for AAPL (Apple Inc.) — the maximum valued stock — as well as its suppliers.
Quickly, in response, Morgan Stanley, a chief firm on Wall Street, considerably lowered its iPhone forecasts from 40.5 million against the nearly 43 million average estimate down to 34 million.
Austrian-based AMS, a key supplier of optical sensors used in the iPhone X, also gave radically lower guidance for the June quarter, with Q2 sales expectations to be around $220 million – $250 million — a near 50% drop from Q1.
According to Wall Street, poor demand for Apple, and the iPhone X in particular, is behind the weak guidance from both TSMC and AMS. Consequently, J.P. Morgan expects that additional suppliers of semiconductors will also report lower than expected June quarter results.
The news worsens with estimates from Japanese investment banking and securities firm Mizuho Securities, that demand for new, high-end iPhone versions will substantially fall in 2H18, and that iPhone production will drop 2% year on year (2H18) with models like the iPhone 9 and iPhone X successor down 15% year on year.