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In a recent development, shares of Apple’s (NASDAQ:AAPL) suppliers took a hit following Barclays downgrade of the tech behemoth due to a potential decrease in product demand in 2024.
What Happened: CNBC reported on Tuesday that the shares of suppliers associated with Apple in Asia experienced a drop after the Barclays downgrade. Taiwan Semiconductor Manufacturing Company (TSMC), a top-tier manufacturer of advanced processors for companies such as Apple and Nvidia (NASDAQ:NVDA), saw a more than 2% decline in shares during morning trading. Foxconn (OTC:HNHPF), a major Apple supplier and the world’s largest electronics contract manufacturer, also experienced a 1.33% drop in shares.
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Moreover, tech and chip stocks such as Samsung Electronics and SK Hynix (OTC: HXSCL) dropped over 2%, while LG Electronics fell 1.78%, leading to a 1.85% drop in South Korea’s Kospi. This situation developed after Barclays demoted Apple’s stock to underweight on Tuesday and lowered its price target to $160 from $161, citing weak iPhone 15 sales and a potential decrease in demand for iPhone 16 and other products. Consequently, Apple’s shares ended the day 3.58% lower.
Despite the downgrade, experts in the industry maintain that Apple’s suppliers continue to see strong growth.
“There’s still 200 to 300 million iPhones that get replaced onto 5G, at least for the next 24 months,” stated Ray Wang of Constellation Research on CNBC’s “Street Signs Asia.”
In a report dated Jan. 3, UBS claimed that TSMC is “poised for a strong rebound in 2024” and sustained a buy rating, albeit with a lowered price target.
Why It Matters: Apple’s $85 billion services business faces potential impacts from a series of legal and regulatory rulings expected in 2024. Furthermore, Apple’s stock was downgraded by Barclay‘s analyst Tim Long from Equal-Weight to Underweight, resulting in a lower price target.
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