Apple suppliers split in Asia as strong iPhone sales meet rising memory costs

On Tuesday, Apple-linked suppliers across Asia fluctuated as investors balanced robust iPhone sales with rising memory chip costs and varied company earnings. Major component makers in South Korea, SK Hynix and LG Innotek, faced declines, down 3.5% and 4.6% respectively. Samsung Electronics and Taiwan's Largan Precision also dipped, 3.3% and 4.2% respectively. However, Chinese firms Goertek and Luxshare Precision rose, 2.7% and 0.6% respectively.

Apple's September-quarter iPhone revenue surged 17.5% year-on-year to $57.6 billion, primarily because of surging iPhone 18 Pro demand. However, the company warned that its December-quarter gross margin would likely drop to 45%-46%, down from a previous estimate of 47.9%, as memory costs continue to rise. Sales of iPads and wearables also underperformed, while services growth is anticipated to slow.

South Korean supplier LG Innotek reported an 18.6% increase in third-quarter revenue, but its operating profit fell by 53.4% due to currency impacts. Taiwan's Largan Precision also experienced margin pressure, with revenue down 11.5% and net profit declining 27.7%.

Even established firms like Samsung Electronics and SK Hynix saw mixed fortunes, as they posted record quarterly earnings driven by demand for AI-related memory and high-bandwidth memory. Yet, profit-taking might be in store as they rallied significantly in the previous session.

Chinese suppliers had a more mixed picture. Goertek showed modest growth in nine-month revenue and profit, while Luxshare Precision reported a 29% increase in revenue and a 13.4% rise in net profit for the same period. Meanwhile, Kioxia's shares fell 15.78% to ¥11,345 following a missed quarterly outlook due to a slowdown in NAND price growth.