The Fortunes of Apple's Giant Asian Suppliers Are Diverging
(Bloomberg) -- All’s not equal among two of Apple Inc.’s biggest suppliers.
Shares of Hon Hai Precision Industry Co., the main assembler of the iPhone, and Taiwan Semiconductor Manufacturing Co., the largest provider of chips to Apple, are the least correlated since April 2015 as their earnings outlooks diverge.
The difference can partly be explained by the nature of their businesses. TSMC is preparing to spend more than $20 billion on a state-of-the-art plant to retain its position as the biggest supplier of made-to-order microchips. Hon Hai, meanwhile, which saw third-quarter earnings impacted by delays in the production of iPhone X, is looking for alternative ways to expand as its assembly model faces rising costs and thinning margins.
Hon Hai slumped as much as 2.8 percent Wednesday in Taipei, extending its drop from a June peak to 15 percent, after reporting the biggest quarterly profit decline since 2008. TSMC is within 3 percent of its record reached earlier this month -- the chipmaker posted a narrower-than-expected retreat in three-month earnings last month.
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