Wednesday, 20 June 2018

Damp iPhone demand to pressure RF chipmakers, Morgan Stanley says

FILE PHOTO - An iPhone X is seen on a large video screen in the new Apple Visitor Center in Cupertino, California, U.S., November 17, 2017. REUTERS/Elijah Nouvelage
PHOTO – An iPhone X is seen on a large video screen in the new
Apple Visitor Center in Cupertino

Thomson Reuters

(Reuters) – Disappointing iPhone sales and a build up in Apple
Inc’s inventory would continue to pressure radio frequency (RF)
chipmakers such as Skyworks Solutions Inc and Qorvo Inc ,
brokerage Morgan Stanley said on Monday.

While the market for RF chips is expanding with the upgrade to 5G
telecom networks from 3G/4G, iPhones account for more than a
third of the market demand and a swing in Apple’s fortunes
impacts RF chip makers more, analyst Joseph Moore said.

“A miss in iPhone units shipments and big upticks in channel
inventory points to additional supply chain cuts for the June
quarter,” Moore wrote in a research note.

Shares of Apple were up 1.5 percent in early trading, while
Qorvo’s were little changed and Skyworks dipped 0.5 percent amid
a decline in the broader market.

Apple sold 77.3 million iPhones in the key holiday quarter,
missing Wall Street expectations of 80 million.

Apple plans to slash its iPhone X production target by half for
the first three months of the year, to around 20 million units,
the Nikkei reported late last month.

Several analysts have cut their estimates for iPhone X shipments
in the past few weeks, citing a high price, among other factors,
for muted demand for the 10th anniversary edition of the iPhone.

Moore estimates Apple purchases about 10 percent of all
semiconductors, and said the broader chip industry would benefit
with a pick up in demand for the iPhone.

“Given Apple’s outsized influence, a reduction in their build
rates and inventory could be the catalyst for industry conditions
to loosen up.”

(Reporting by Muvija M in Bengaluru; Editing by Savio D’Souza)

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