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Shares of suppliers to Apple drop after an iPhone chip partner predicts ‘weak demand’ for smartphones

  • Shares of Apple iPhone suppliers such as Skyworks Solutions, Qualcomm and Analog Devices fell after Taiwan Semiconductor Manufacturing gave a weak revenue forecast for its June quarter.
  • TSMC is the world's largest semiconductor foundry company and manufactures chips for Apple and its component suppliers.
  • Morgan Stanley says smartphone chip weakness is the main reason for TSMC's disappointing sales guidance. The firm specifically cites Apple iPhone X processor order cuts as a driver.
Source: Analog Devices

A disappointing forecast from a key Apple chip partner drove shares of iPhone suppliers lower.

Taiwan Semiconductor Manufacturing said Thursday that its revenue forecast range for the second quarter is $7.8 billion to $7.9 billion versus the Wall Street estimate of $8.8 billion.

"Moving into second quarter 2018, continued weak demand from our mobile sector will negatively impact our business," the company's chief financial officer, Lora Ho, said in a statement.

TSMC is the world's largest semiconductor foundry company and manufactures chips for Apple and its component suppliers.

Morgan Stanley said Apple's iPhone was a big reason for TSMC's poor guidance.

"Smartphone semi weakness [is] the main reason for the revenue shortfall," analyst Charlie Chan wrote in a note to clients Thursday. "Beside the order cuts from the current Apple iPhone X processor, we attribute the major revenue shortfall in the smartphone segment to key customer MediaTek ... and around a month's delay of Apple's new 7nm processor to July."

As a result, the stock prices of Apple suppliers dropped Thursday. Skyworks Solutions, Qualcomm, Cirrus Logic, Qorvo and Analog Devices shares all declined more than 3 percent.

Apple did not immediately respond to a request for comment.