Yesterday’s debut of the iPhone 4S met with a lackluster response in Taiwan, as many local companies in Apple Inc’s supply chain saw their shares fall in Taipei trading.
Analysts said the iPhone 4S was slightly below market expectations, as the new model looked largely similar to the iPhone 4 despite the new phone’s hardware and software enhancements.
As Apple’s share price was down slightly on Tuesday in New York trading, although the NASDAQ was up almost 3 percent, Citigroup said it indicated investors’ disappointment with the iPhone 4S.
“As such, we reckon the market may react favorably to Apple’s competitors and unfavorably to the supply chain of the iPhone 4S,” Citigroup Global Markets analyst Kevin Chang (張凱偉) said in a client note yesterday.
Shares of system assemblers Hon Hai Precision Industry Co (鴻海) fell 1.89 percent to NT$67.60 and Pegatron Corp (和碩) dropped 3.7 percent to NT$27.30, while case maker Foxconn Technology Co (鴻準), a Hon Hai affiliate, plunged 6.92 percent to NT$96.80.
Touch-panel makers Wintek Corp (勝華) saw shares decline 3.78 percent to NT$22.90, TPK Holding Co (宸鴻) edged down 0.18 percent to NT$554 and Chimei Innolux Corp (奇美電) was 1.59 percent lower at NT$12.40.
Camera-lens makers Largan Precision Co (大立光) slumped 6.59 percent to NT$652 and Genius Electronic Optical Co (玉晶光) dived 6.95 percent to NT$207.50. Printed-circuit-board maker Unimicron Technology Corp (欣興) ended 5.71 percent lower at NT$39.60 and connector maker Cheng Uei Precision Industry Co (正崴) closed down 3.82 percent to NT$63.
Meanwhile, Primasia Investment Consultancy Co said the iPhone 4S might not necessarily be good news for the Taiwanese supply chain in terms of average selling price (ASP).
To fend off competition from several new smartphones to be launched by the end of the year, Primasia said Apple’s decision to offer the same price for the iPhone 4S as its predecessor at US$199, US$299 and US$399 for 16 gigabyte (GB), 32GB and 64GB units respectively, in the US, as well as lowering the price of the 8GB iPhone 4 to US$99 from US$199, would lead to demands for more price cuts from its Taiwanese suppliers, including Hon Hai, TPK, Wintek and Chimei.
“We expect that only a few Taiwanese component suppliers, such as camera module maker, Largan and Genius Electronic, can benefit from the migration from iPhone 4 to 4S, while other Taiwanese component suppliers may face ASP pressure,” Primasia said in a research note.
In the near term, shares of Apple supply-chain companies in Asia are likely to enter a period of price correction, judged by the lack of new design and expectations built into the iPhone 4S, JPMorgan Securities (Asia Pacific) Ltd said.
“We are most negative on Hon Hai, which is also seeing volume downside in Apple iPads,” JPMorgan analysts Gokul Hariharan and Alvin Kwock (郭彥麟) said in a separate note.
JPMorgan said the launch of the iPhone 4S would be neutral to HTC (宏達電), but Citigroup thought otherwise as Apple has included Sprint as one of its distributors in the US market and will demand Sprint to aggressively push the iPhone.
“The inclusion of Sprint could be very negative for companies with big exposure to Sprint such as HTC, which has over 15 percent sales exposure to Sprint based on our estimate,” Chang said in his note.
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