'Apple concept stocks' down despite iPhones' debut
CNATAIPEI--Shares of local electronics makers in the Apple Inc. supply chain came under pressure Wednesday, even though the U.S.-based consumer electronics giant launched two new iPhone models targeting both the high- and low-end markets, dealers said.
September 12, 2013, 12:12 am TWN
Sales of these “Apple concept stocks” were triggered by a 2.3 percent decline in Apple shares on Wall Street overnight after the company unveiled its new devices, dealers said.
In yesterday's trading, shares of smartphone camera lens supplier Largan Precision Co., had fallen by 6.44 percent to NT$945 and shares of flexible printed circuit board maker Flexium Interconnect Inc. had also dropped 5.94 percent to NT$103.
Shares of Hon Hai Precision Industry Co., which assembles iPhones and iPads, dropped 1.3 percent to NT$76 with 84 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.22 percent at 8,208.99 points.
“The two new iPhones were widely anticipated in the market but many investors are selling because Apple failed to deliver any big surprises,” KGI Securities analyst Eason Lee said.
“It remains to be seen whether the two new iPhones will become killer products in the competitive global smartphone market,” Lee added.
Apple launched its iPhone 5S with hopes of grasping a bigger share of the high-end smartphone market. In addition, Apple unveiled the lower cost iPhone 5C, which has multi-color plastic casing options to cater to emerging markets, particularly China.
Faced with stiff competition from the Android camp, Apple has seen a drop in its share of the global smartphone market, from almost 24 percent in late 2011 to about 14 percent currently.
“The only impressive feature of the high-end iPhone 5S is the fingerprint sensor technology. The iPhone 5C appears not to be competitive enough in its pricing, although it is aimed at the lower end market,” Lee said.
In China, the iPhone 5C has been priced at 4,488 Chinese yuan (US$735) for the 16G version and 5,288 yuan for the 32G model, higher than the market had anticipated.
Largan's Gross Margin to Be Squeezed
“It was no surprise that investors rushed to dump local Apple suppliers, in particular Largan, which had been significantly boosted by high hopes for the new iPhones,” Lee said.
Many investors are worried that Largan's gross margin will be squeezed by lower end camera lens shipments to Apple for iPhone 5C production, Lee said.
“I think Largan shares will continue to suffer downward pressure. If the stock fails to hold above NT$935, it could test the next technical support point around NT$920-NT$915,” Lee said.
Hon Hai shares were also hit by its latest lower-than-expected sales report, dealers said. The company's consolidated sales for August fell 6.6 percent from July to NT$280.43 billion, failing to meet an earlier market estimate of around NT$300 billion.