As iPhone sales appear to be on the decline, the future is uncertain for the global semiconductor sector and other parts of the iPhone supply chain.
According to the Financial Times, concerns were sparked by the recent revelation from Apple that it would no longer disclose how many iPhones or Macs it sells. Other issues — such as problems from falling cryptocurrency values and global tensions between China and the U.S. — have led to speculation that the semiconductor industry is facing a long-term, structural slump.
“In the last couple years, semiconductors along with . . . other tech stocks have done really well,” said Michael Arone, U.S.-based chief investment strategist at State Street Global Advisors. “They have had high growth rates and they have been beneficiaries of mobile phone, tablets and gaming.”
“People are concerned the revenue growth won’t live up to expectations . . . If folks are not upgrading their devices at the same rate — whether phones or tablets or gaming — if the rate of replacement is slower, it is going to be an important signal that the economy is slowing,” he added.
And there was more bad news on Monday (November 19) when Chinese authorities said they have found “massive evidence” of antitrust violations by three of the world’s top memory chip manufacturers: South Korea’s Samsung Electronics and SK Hynix, and U.S.-based Micron. The three companies account for more than 95 percent of the world’s supply of DRAM memory chips.
And in the past few weeks, shares in some of the world’s biggest semiconductor companies such as Taiwan Semiconductor, Samsung Electronics and Advanced Micro Devices in the U.S. have dropped. In addition, Samsung Electronics, one of the largest technology groups in Asia, warned at the end of October of a decline in the price of memory chips, while just this week, shares in U.S. group Nvidia, which makes gaming chips, fell as much as 17 percent after the company missed revenue expectations.
Chris Retzler, portfolio manager at Needham Funds, said semiconductors are a barometer of the broader economy. “Semis continue to play an ever-increasing role in the global economy and all of our lives ... we are seeing semis more widely used in industrial areas like healthcare, energy, automobiles,” he said.