Apple's Asia suppliers fall following iPhone XR production rumours

Apple's Asia suppliers fall following iPhone XR production rumours

Speculation new release facing weak demand just days after it went on sale

Credit: Dreamstime

Apple’s Asian supplier and assembler stocks fell on Tuesday following a media report that the iPhone maker had told its smartphone assemblers to halt plans for additional production lines dedicated to its new iPhone XR.

Taiwan-based assembler Pegatron fell five per cent and rival Hon Hai Precision (Foxconn) dropped 3.6 per cent. Apple is widely considered the biggest customer for Foxconn.

Apple shares fell nearly four per cent on Monday after the report by the Nikkei Financial Daily, which fuelled concerns that the iPhone XR - the cheapest of three iPhones unveiled in September - was facing weak demand just days after it went on sale.

The Nikkei, citing supply chain sources, said Apple had also asked smaller iPhone assembler Wistron to stand by for rush orders, but the firm would receive no planned orders for the iPhone XR this season.

"Foxconn's proportion of orders is bigger than Pegatron's with a ratio of about six to four. Wistron doesn't have as many orders as the two, so the impact won't be so big there," said Nicole Tu, analyst at Yuanta Investment Consulting in Taipei.

Apple began shipping the iPhone XR on 26 October after two weeks of pre orders. The company had released the higher priced iPhone XS and XS Max more than a month earlier.

On Apple's post-earnings call last week, CEO Tim Cook said he had very little sales data for the iPhone XR, but the other two models had got off to a "really great start."

Apple said sales for the usually busy holiday period would likely miss analyst expectations as sales in emerging markets including India were weak.

Demand concerns have weighed on Apple's stock in the past few sessions, pushing its market value below US$1 trillion.

On Tuesday, shares in other Taiwan-based Apple suppliers fell sharply as well.

Flexium Interconnect and camera lens-maker Largan Precision were both down more than six per cent. The Taiwan Weighted Index was down around 0.7 per cent.

Among other Apple suppliers in the region, Hong Kong-based acoustic components maker AAC Technologies Holdings fell over six per cent. South Korean electronic parts suppliers Samsung Electro-Mechanics and LG Innotek were down more than seven per cent.

Apple did not respond to a Reuters request for comment. Foxconn, Pegatron and Wistron declined to comment.

(Reporting by Sayantani Ghosh in Singapore and Jess Macy Wu in Taiwan; Editing by Christopher Cushing and Darren Schuettler)

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