In a surprising turn of events, Apple Inc (NASDAQ: AAPL) and its key suppliers in Taiwan are facing a significant sales slump despite the recent launch of the new iPhone and various Android devices.
Taiwan Semiconductor Manufacturing Co (NYSE: TSM), the leading contract chipmaker, experienced a 13.4% sales drop, a figure that, while concerning, is better than initially feared.
The broader group of major assemblers and component makers saw a sharper decline of 16.4%, plummeting to NT$1.24 trillion ($38.7 billion) from the previous year, according to data compiled by Bloomberg.
The resilience of TSMC probably reflects the sustained demand for artificial intelligence accelerators it produces for Nvidia Corp (NASDAQ: NVDA), Bloomberg reports.
Leading the downturn, device assemblers Hon Hai Precision Industry Co, Compal Electronics Inc, and Quanta Computer Inc faced significant declines. In contrast, Pegatron Corp noted a slight growth in September, a recovery from a dismal performance in August.
The overall decline, the steepest since June, has resulted in an 8.8% slump for the first nine months of the year.
The release of Apple's iPhone 15 generated a positive buzz, yet it wasn't enough to offset the decline. The enhancements in the entry-level model were well-received, but the excitement was tempered by the ongoing challenges faced by smartphone makers globally.
Companies like Xiaomi Corp (OTC: XIACF) (OTC: XIACY), Oppo, and Honor Device Co are also expanding their portfolios, yet the industry is grappling with a slowdown that began in 2022.
The AI industry's growth, particularly in server sales, is anticipated to double in 2024, offering hope in these challenging times.
Price Action: TSM shares traded higher by 0.20% at $92.18 premarket on the last check Thursday.