Samsung Display, SK hynix to suffer blow from 'Apple shock'
By Jun Ji-hye
koreatimes.co.kr
Samsung Display and SK hynix are likely to suffer the most among Korean parts suppliers from Apple's shock revenue-guidance downgrade, analysts said Sunday.
Other companies expected to receive a blow include LG Display, Samsung SDI and Samsung Electronics, they noted.
"Concerns are growing over future performance of relevant parts companies as uncertainty grows over sales volume of iPhones," Hana Financial Investment analyst Kim Rok-ho said.
On Wednesday, Apple CEO Tim Cook downsized his firm's earnings forecast for the first quarter of fiscal 2019 in a letter to investors, blaming the slowing of the Chinese economy. Trade tensions with the United States are seen hitting exports and growth.
This is raising possibility for the U.S. company to curtail iPhone production in the first half of the year, dealing a blow to its parts suppliers.
Samsung Display supplies small- and medium-sized organic light-emitting diodes (OLED) panels for the latest iPhone XS series, while Samsung Electronics and SK hynix supply memory chips for iPhones.
Analyst Kim said SK hynix would suffer more of a blow compared to Samsung Electronics as the former's sales depend more on Apple.
Samsung SDI and LG Display could also be negatively affected by Apple's impact as Samsung SDI's equity method gains reflect Samsung Display's performance, while LG Display supplies LCD panels for iPhones.
Cook cut the company's sales forecast to $84 billion for the first quarter of fiscal 2019, 60 days after he said Apple could earn as much as $93 billion in that quarter.
"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," he said in the letter to investors. "In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad."
With Apple's stock tumbling 9.96 percent Thursday from the previous day, securities companies here are also rushing to cut their target prices for Samsung Electronics and SK hynix amid double trouble combined with the downturn in the global chip market.
Mirae Asset Daewoo cut its target price for Samsung Electronics to 50,800 won ($45) from 63,000 won, and SK Securities' to 46,000 won from 60,000 won.
Hana Financial Investment lowered its target price for SK hynix to 57,000 won from 62,000 won.
"Operating profit of Samsung Electronics is expected to decrease 28 percent to 42.2 trillion won this year," Eugene Investment and Securities analyst Lee Seung-woo said. |
