Concern that Apple Inc’s sales travails signal the end to the boon period for smartphone makers sent semiconductor stocks into a tailspin.
A plunge of as much as 3.2% in makers of computer chips wiped away more than $15bn in value, as concern that slowing sales of Apple’s iPhones will damp demand for the semiconductors that power them. All 16 members of the Standard & Poor’s 500 sub-index that tracks the group tumbled, led by Skyworks Solutions Inc’s plunge of 7%, the most since October.
Disappointing sales forecasts from technology giants including Apple and Microsoft Corp have led to deep losses among makers of everything from software to computers and the components that make them work.
Economic concerns are weighing down demand for new smartphones and other personal gadgets, with data Friday showing consumer spending rose less than forecast in March, wrapping up the weakest quarter in a year.
“All the markets are really challenging right now, whether it’s servers, PCs or smartphones,” Ian Ing, an analyst at MKM Partners, said. “Apple is in the middle of a weak period and investors are still digesting that. The thinking is that smartphone growth is really saturated.”
The S&P 500 fell 1.1% in New York on Friday, with technology shares losing 1.3%. The semiconductor index dropped 3.1%, the most among 24 groups in the broader gauge. At the heart of concerns for chipmakers are difficulties they face in adapting to slowing markets in both the US and China, Ing said.
Analysts now project the industry’s first- quarter earnings will fall 7%, compared to a 6.5% decline expected a week ago. Analysts see a full-year profit decline of 9%.
Losses in the tech sector accelerated on Friday as Seagate Technology Plc and Western Digital Corp, makers of data storage products, both reported results that missed estimates and said future sales will fall short of analyst forecasts.
The companies’ shares fell at least 13% as concern that slumping PC sales will continue to weigh on their valuations. Apple has plunged 12% in the past five days and is mired in its longest losing streak since 2013, after reporting on Tuesday its first quarterly revenue contraction in more than a decade and forecasting another decline in its next results.
Micron Technology Inc fell 5.5% on Friday, an about-face from gains just before Apple reported earnings, when the chipmaker saw its best day since January. Apple is Micron’s third-biggest customer, according to data compiled by Bloomberg.
Texas Instruments Inc, which relies on Apple for 11% of its revenue according to Bloomberg data, plunged 2.9%. The suppliers’ pain was magnified at the end of the week after billionaire investor Carl Icahn said he had sold a remaining $4.8bn stake in Apple amid concern the company will struggle to sell in China.
Among other companies declining on first-quarter earnings, semiconductor maker Xilinx Inc saw its biggest two-day slide since October following its report on Wednesday.
Intel Inc, the biggest maker of computer chips, fell in sympathy, tumbling 2.8% as it careens toward its worst week since February 5. The company earlier this month said it would slash 12,000 jobs after forecasting sales below analyst estimates.