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In a note Thursday, a BofA analyst said sluggish iPhone demand has broad implications for chipmakers, although they are modest.
The analyst was speaking following reports Wednesday that tech giant Apple (NASDAQ:AAPL) was ditching plans to boost production of its new iPhones this year after an anticipated rise in demand did not occur. A BofA analyst downgraded Apple to Neutral in a separate note on Thursday.
The analyst said that the analyst also “lowered iPhone unit estimates by roughly 5%-10% across DecQ/MarQ/JunQ Apple represents 10%-15% of annual semis demand and weakness exacerbates risks for Apple’s direct chip suppliers across cellular, radio frequency (RF) and memory, as well as indirectly for foundry (TSMC, GlobalFoundries, others) and semicap/testing equipment.”
“Semiconductor demand is influenced heavily by discretionary consumer spending across PC, phone, autos, gaming, so sluggish iPhone demand could be symptomatic of further weakness in other end-markets,” added the analyst.
However, BofA’s initial thoughts are that risks to Apple suppliers are in a “benign 1%-5% range,” and while they are unwelcome, they are “not a calamity, especially as sales for Apple’s chip suppliers are driven more by content than iPhone units.”
