Chip Concerns And Low iPhone Demand Send Apple Stocks Down $64B

Concerns over low iPhone demand continue to plague Apple, with the company’s shares cumulatively down 7.1 percent in the three trading sessions through Monday (April 23).

According to USA Today, $63.9 billion of shareholder value was wiped out as a result of the decline, which was caused by a prediction of softer smartphone sales from Taiwan Semiconductor Manufacturing Co. (TSMC).

TSMC, the world’s largest contract chipmaker and a major Apple supplier, said it expects 2018 growth of 5 percent for the global semiconductor industry, lowering its prediction from an earlier forecast of 5–7 percent.

“Apple represents nearly 20 percent of TSMC’s revenue, so the outlook potentially points to weaker-than-anticipated iPhone demand,” said Atlantic Equities Analyst James Cordwell.

In addition, Mizuho Securities USA revealed that its data also points to soft demand for the iPhone X, as well as a steady fall in iPhone 8 and 8 Plus orders.

“Heading into Apple’s much-anticipated March (FY2Q18) quarter next week, the Street has gone into ‘full panic mode’ as supply chain checks out of Asia indicate that June iPhone shipments are trending well below expectations,” GBH Insights analyst Daniel Ives wrote in a note to clients Tuesday.

And the day before (April 23), Morgan Stanley analyst Katy Huberty cut her forecast for the number of iPhones shipped during the March-ending quarter by one million, and six million for the current quarter. She expects the company to ship 210 million iPhones in fiscal 2018, down from her previous forecast of 217 million.

“We expect Apple to report an in-line March quarter, but are cautious into earnings on May 1 due to our belief that June quarter consensus estimates need to be revised lower,” Huberty wrote. “Apple’s capital return announcement could amount to a ‘sell the news’ type of event, especially if forward estimates are revised materially downward.”

Meanwhile, Bank of America analyst Wamsi Mohan believes that Apple will move away from smartphone cycles and more toward services such as its App Store, iCloud, Apple Music and Apple Pay.