Investors are speculating whether to invest in semiconductors or not due to a drop in iPhone sales

Orders from the technology giant; Apple Inc. have been a blessing to the semiconductor players, mainly because of the reputation of the firm’s iPhone over the last ten year, however, due to the down-trending sales of the smartphone, investors are speculating whether or not they should hold on to their investment stocks related to semiconductors.

The fiscal results of the tech giant for the 3rd quarter ended 30th June 2019 reflected the drop in the sales of the iPhone by 11.8 percent which is equivalent to US 25.99 billion dollars, from the prior US 29.47 billion dollars year-on-year. This is the 3rd consecutive quarter in which the sales have declined.

The most recent data of the Bank Negara Malaysia reflected the decline in the gross exports of the semiconductor this year.

Even though the ringgit has been weakened, which would have aided exports, the net positive from currency would be lesser for semiconductor players, according to the analysts’ opinion.

The Head of Research at MIFD, Mohd Redza Abdul Rehman stated that this is because there is a requirement for the semiconductor players to import wafers from abroad to assemble, as well as, test operations.

Rehman stated when contacted by The Edge Financial Daily that there has been a shrink in the imports from Taiwan as from April this year. Taiwan Semiconductor Manufacturing Co Ltd which is headquartered in Taiwan is the largest chipmaker of the maker. In my point of view, this looks like a key indicator for the Electrical and Electronics sector.

The share prices of the majority of the OSAT (outsourced assembly and test) firms have given negative performance exclusive of the Inari Amertron Bhd, which grew 6.7 percent.

There has been a decrease of 38.1 percent in the Unisem (M) Bhd since the initiation of the year, 15.1 percent drop in the sales of Malaysian Pacific Industries Bhd and 0.6 percent decline in Globetronics Technology Bhd.