Smartphone Suppliers Slide After Asia Peers' Earnings Disappoint

(Bloomberg) -- Smartphone suppliers were among the worst-performing semiconductor stocks Tuesday after two disappointing earnings reports from peers in Asia alarmed investors.

Apple Inc. suppliers Broadcom Inc., Cirrus Logic Inc. and Skyworks Solutions Inc. fell more than 1 percent. They were among the worst performers in the Philadelphia Semiconductor Index, which was little changed in afternoon trading. Sunny Optical Technology Group, based in Yuyao, China, lost nearly a quarter of its market value on Tuesday after earnings missed estimates. That followed a disappointing report from Taiwan-based Hon Hai Precision Industry Co. on Monday that showed a surprise decline in second-quarter earnings as profit margins were marred by a boost in sophisticated device production like the iPhone X.

Semiconductor stocks, among the best-performing sectors in the past two years, have been under pressure since Morgan Stanley warned of growing cyclical risks on Aug. 8. Microchip Technology Inc. heightened concerns the following day with a weaker-than-expected revenue forecast and a warning on the effects of tariffs. The Philadelphia Semiconductor Index has fallen more than 3 percent since Aug. 8 and is about 6 percent shy of a March record. Even with that, the group of 30 chipmakers and equipment suppliers has gained more than 8 percent this year after rising 38 percent in 2017 and 36 percent in 2016.

U.S. chipmaker Nvidia Corp. and equipment supplier Applied Materials Inc. will be scrutinized when they report earnings on Thursday. The pair will be among the last in the sector to report, with Analog Devices Inc. third-quarter results expected August 22.

To contact the reporters on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net;Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Brad Olesen, Richard Richtmyer

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