Apple supply chain sinks into red on coronavirus fears
Shares in Apple slipped more than two per cent in afternoon trading while its suppliers around the globe were dragged into the red after the tech giant warned the coronavirus outbreak would impact its quarterly targets.
The iPhone maker last night told investors that it would not meet its revenue forecast of between $63bn (£48bn) and $67bn for the three months to the end of March.
The fall is set to wipe roughly $30bn off Apple’s market capitalisation, just as it was approaching a valuation of $1.5 trillion. The company’s Frankfurt-listed shares fell almost five per cent this morning before recovering to a fall of roughly 2.25 per cent.
But the shock warning also took its toll on Apple’s global suppliers as the Silicon Valley tech giant acknowledged that the coronavirus was putting pressure on its supply chain.
Apple suppliers Taiwan Semiconductor, Qualcomm, Intel, Broadcom, Texas Instruments, Micron Technology, Microchip Technology and Qorvo all fell between one per cent and three per cent.
European chipmakers STM Electronics and Dialog Semiconductor were down roughly 1.5 per cent and 4.5 per cent respectively, while Asian supplier Foxconn slipped marginally.
“Widespread shutdowns in the Chinese provinces that have been worst hit by the epidemic have caused a serious disruption to supply chains, creating shortages of parts and components for companies globally,” said Raffi Boyadjian, senior investment analyst at XM.
“With stock markets around the world currently riding high near record levels, the risk of a sharp correction is rising as the virus impact becomes more evident and more companies lower their earnings guidance.”
Europe’s major indexes were all trading lower today as investors reacted to the first indication that coronavirus could impact markets outside China.
The FTSE 100 was down 0.7 per cent shortly before market close, while Germany’s Dax and France’s Cac 40 closed down 0.68 per cent and 0.34 per cent respectively.
“A warning from Apple has put the cat among the pigeons and provided the first real evidence that the coronavirus will have ramifications beyond China,” said Chris Beauchamp, chief market analyst at IG.
“Markets had been rubbing along in expectation that stimulus from China would smooth over any bumps in the road. But Apple’s warning upends those forecasts and suggests that we will see other companies reporting warnings.”
There are now more than 70,000 cases of coronavirus confirmed globally, with China reporting 1,886 new cases overnight.