Reports about lower-than-expected demand from Apple’s suppliers was one of the reasons so many people were predicting doom for the iPhone X.
But now that Apple has announced its crazy strong earnings for the quarter, Apple’s suppliers are enjoying a welcome boost to their stock prices — with shares rising by more than 14 percent in one case.
One company experiencing a boost is Austria’s AMS, a supplier which produces some of the components for Apple’s TrueDepth camera. AMS shares rose almost 8 percent after Apple announced its earnings.
This just about makes up for the 9.1 percent drop it experienced in the weeks prior to the announcement, when investors were panicking about a possible iPhone X flop.
Dialog Semiconductor, which also makes components for the iPhone, experienced a stock rise of almost 8 percent. In Asia, component maker Nitto Denko rose 5 per cent, while Interlex increased by close to 15 per cent higher. Largan Precision picked up by over 6 per cent.
Apple’s giant ecosystem
At the end of the day, it’s a reminder of just how vast the ecosystem of companies which rely on Apple actually is. Despite the fact that most of these companies do work for clients beside Apple, their stock price rises and falls on the success and failure (or perceived failure) of their most famous Cupertino client.
Apple’s enormous success this quarter is also a reminder about the dangers of relying too much on supply chain order numbers. As my colleague Ed Hardy wrote yesterday, this can result in massive feedback loops in which analysts only see what they expect to see.
Timothy Arcuri, analyst at the Swiss bank, notes that “supply chain data points … ultimately say very little about units/demand and more about the cost pressure that Apple is under.” Will folks remember this lesson in the future? Almost certainly not. But we all totally should!
Source: Financial Times