uploads///b_Semiconductors_STOCKS May

Apple Stock Fell Over 5% on iPhone Headwinds


Dec. 4 2020, Updated 10:52 a.m. ET

Apple’s headwinds

China retaliated against the US’s tariff hike on Chinese imports by announcing 5% to 25% tariffs on $60 billion worth of US imports. Apple (AAPL) would be the worst hit from the tariffs, as it earns 20% of its revenue from China and manufactures almost all its iPhones in China and imports them to the United States. These tariffs could significantly increase Apple’s production costs.

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Apple is already grappling with low iPhone demand because of its premium price. If it passes on the tariff cost to customers, it could significantly impact its iPhone sales. To add to the troubles, the Supreme Court allowed consumers to sue Apple for monopolizing iPhone software applications by forcing customers to buy applications from its App store at a premium price.

The Supreme Court didn’t rule that Apple violated the antitrust law but gave iPhone owners the chance to sue the company. Apple argued that it is just an intermediary that connects application developers to consumers and can therefore not be sued by iPhone owners for violating anti-trust laws. However, the Supreme Court stated that consumers purchase applications directly from Apple’s App store, which creates a buyer and seller relation between the two, allowing them to sue Apple, their direct supplier.

If some iPhone users file a suit, Apple’s iPhone sales could take a big hit, which would impact chip suppliers, as Apple is one of the largest customers of the semiconductor industry.

Apple’s stock fell over 5%

Apple (AAPL) stock fell 5.8% on May 13, bringing the tech-heavy NASDAQ down 1.7% on May 13. NASDAQ had less than four top gainers that rose only 1%. Seven of the top ten losers on May 13 on NASDAQ were chip companies including Skyworks, NXP Semiconductors, Microchip Technology, Western Digital, Maxim Integrated, Advanced Micro Devices, and NVIDIA. Stocks of Apple’s suppliers Skyworks and NXP Semiconductors fell more than 7%.

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