New IPhone No Help to Assembler as Hon Hai Slides Down Rankings

(Bloomberg) -- The contrast between Apple Inc.’s ascension to a $1 trillion stock and the share performance of its biggest iPhone assembler just got even starker.

Hon Hai Precision Industry Co. has surrendered its position as Taiwan’s second-biggest stock after six years. Concern is mounting for some Taiwanese Apple suppliers, which are struggling to adjust to a new dynamic of higher-priced iPhones because their revenue relies on the number of devices sold.

Hon Hai has slipped behind Formosa Petrochemical Corp., the island’s only publicly traded oil refiner, which has a market cap of NT$1.32 trillion ($43 billion), according to data compiled by Bloomberg. Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker, has a value of NT$6.74 trillion.

New IPhone No Help to Assembler as Hon Hai Slides Down Rankings

Apple unveiled its new iPhone XS and XS Max devices earlier this month, though preorders are weaker than those for the iPhone X, according to Rosenblatt Securities Inc. Taiwan’s Apple suppliers have seen their share prices fall as shipment growth has stagnated.

Hon Hai has slumped 38 percent since hitting a record price in the middle of last year and is trading at its lowest level relative to the MSCI ACWI/Information Technology Index since 2002.

Investors are shifting funds to defensive stocks like Formosa Petrochemical because of macro uncertainties including the China-U.S. trade war, said Reliance Securities Investment Consultant Co. vice president Richard Lin.

The downward trend could continue for Hon Hai, Capital Investment Management Corp. vice president Alan Tseng said. “Apple suppliers are bearing the risks of possible disappointing sales of the new iPhones,” he said.

©2018 Bloomberg L.P.