Taipei, Sept. 18 (CNA) Shares in Largan Precision Co., a smartphone camera lens supplier to Apple Inc., closed below the NT$4,000 (US$130) mark Tuesday amid rising worries over the escalation of trade friction between the United States and China, dealers said.
The selling also reflected fears that Largan will not benefit much from the launch of the latest more affordable iPhone -- the iPhone XR -- because the model is equipped with a single lens camera, which is expected to impact the Taiwanese supplier's shipments, they said.
Largan shares fell NT$425 or 10 percent, the maximum daily decline, to end at NT$3,860.00 with about 2 million shares changing hands on the Taiwan Stock Exchange, where the benchmark weighted index closed down 0.63 percent at 10,763.21 points.
The stock came under pressure soon after the local equity market opened, and selling escalated throughout the session after U.S. President Donald Trump announced the imposition of a 10 percent tariff on US$200 billion worth of Chinese goods, starting from Sept. 24, with the tariff expected to rise to 25 percent by the end of the year, though products such as Apple Watch will be spared.
China said it would retaliate with the imposition of tariffs on US$60 billion worth of U.S. goods if the tariff on the US$200 billion worth of Chinese merchandise is announced.
"China's US$60 billion is just a fraction of the US$200 billion worth of Chinese goods planned by the U.S.," Mega International Investment Services Corp. analyst Alex Huang. "So the market is concerned that China will come up with measures to affect U.S. sales on the mainland, which could hurt Apple suppliers like Largan."
Fears over rising trade tensions between Washington and Beijing also sent shares in other Apple suppliers lower, with iPhone assembler Hon Hai down 2.57 percent to close at NT$75.80 and metal casing maker Catcher Technology Co. down 1.15 percent to end at NT$344.50.
"Selling in Largan also came after a brokerage report said the iPhone XR will dominate sales of the latest iPhone as the low-end model has only one single lens camera, which is expected to bode ill for the Taiwanese supplier's shipments down the road," Huang said.
According to the research note released by China-based TF Securities analyst Kuo Ming-chi (???), iPhone shipments for the second half of this year could range from 75-80 million units and the iPhone XR will account for 55-60 percent of sales due to its competitive pricing compared with the high-priced iPhone XS and iPhone XS Max, both of which boast higher specifications.
Kuo has a good record of accurately predicting Apple's moves and assessing the fundamentals of its suppliers.
The market has been mixed about Largan's outlook after the company forecast earlier this month that sales for September will stay little changed from August, although the third quarter is the traditional peak season for the electronics sector.
Largan said due to its limited production capacity and yield rates, the company does not expect to be able to meet its clients' demands during the peak season.
A Japanese brokerage lowered its target price on Largan shares from NT$5,500 to NT$4,900 amid worries over the company's shipments after the sales forecast.
Source: Focus Taiwan News Channel