Apple Shares Drop After Virus Warning Rattles Tech Investors

Apple Inc.’s shares fell 4.1% in pre-market trading after the companysaid the fallout from the coronavirus will cause it to miss its sales targets this quarter, sending shockwaves across tech stocks globally.

Shares of Apple’s European suppliers fell in early trading, echoing an earlier decline in their Asiancounterparts. Europe’s benchmark Stoxx Tech Index fell as much as 1.6% on Tuesday, withDialog Semiconductor Plc down 6%,AMS AG dropping 5.1% andSTMicroelectronics NV falling 4.8%. Equipment makers like ASML Holding NV were also affected by the broader selloff. The shares fell as much as 2.9% in Amsterdam.

Mirabaud’s Neil Campling said that Apple’s warning threatens to open the “floodgates” as the virus affects supply chains around the world. The Chinese factories that make the iPhone, Apple’s main revenue generator, are ramping up production slower than expected as they work to contain the virus, which has killed more than1,800 people in the country. Chinese demand has also been held down as stores closed and customers stayed away, the Cupertino, California-based company said in astatement on Monday.

“The semiconductor industry and supply chain is both complex and truly global,” Campling said in emailed comments. “As we navigate through the rest of the quarter, we continue to see a high probability of there being a plethora of downward revisions.”

In Asia, Apple suppliers TDK Corp. dropped 4.7% and Murata Manufacturing Co. declined 4.2% in Tokyo. In the U.S., futures on the Nasdaq 100 are down 0.9%.

Read more:‘Nightmare’ for Global Tech: Virus Fallout Is Just Beginning

Until now, tech stocks have been on a tear this year, with the U.S. Nasdaq 100 Index up 10% in 2020. Goldman Sachs Group Inc. analysts said that they see the impact from the virus as a “temporary issue” for Apple, even as they reduced their forecasts for the March and June quarters.

Here’s what analysts are saying about Apple’s outlook cut and the impact on the global semiconductor supply chain:

ODDO (Stephane Houri)

  • Apple didn’t provide a new forecast for fiscal 2Q20 revenue on Monday and it’s still uncertain — probably for the company, too — how much the guidance will be affected
  • Apple is expected to announce a new, cheaper iPhone model this spring, and it’s unclear if delays in China will affect that launch
  • Read-across is negative for companies exposed to Apple, such as AMS, STMicro, Dialog and Soitec


  • As with every other company operating in China, the situation on the ground continues to evolve
  • While the firm reduced Apple forecasts for the March and June quarters, this is a temporary issue for Apple
  • Regarding June quarter, effects are mainly supply-oriented as expected new products like the SE 2 and iPad Pro roll out potentially push out and Apple finds itself without enough inventory more broadly
  • Goldman has a neutral rating on Apple


  • Apple’s warning will not be the last; AMS will be hit as they haven’t factored in any impact from the coronavirus, STMicro should also see some slowdown while NXP won’t be able to avoid an impact, either
  • The issue is the disturbed supply chain, which will impact most producers to some extent
  • Hard to say if the impact will be limited to this quarter

— With assistance by William Canny

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