For Cues On Apple's Upcoming Q1 Results, Watch This Key Supplier's Earnings Print Tonight, Says Munster

Apple Inc. AAPL chip supplier Taiwan Semiconductor Manufacturing Company Limited TSM is scheduled to report its fourth-quarter results on Thursday.

What Happened: TSMC’s forward guidance will have a measurable impact on the market’s view about Apple’s March quarter commentary, Loup Fund’s Gene Munster said in a threaded tweet.

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Based on the monthly data released by the Taiwanese foundry, Munster expects essentially in-line revenue for Apple’s December quarter. Earlier this week, TSMC reported December revenue of $6.32 billion. Combining the monthly data released by the company, the quarter’s revenue would be at $20.55 billion, roughly in line with estimates.

Munster noted that in the June quarter, TSMC’s revenue was up 44% and Apple’s iPhone revenue was up 3%. While the former’s revenue rose 43% in the December quarter, the consensus forecast for iPhone revenue is a 2% year-over-year decline, the fund manager said.

There isn’t likely to be an upside due to the timing gap between when TSMC sells to Apple and when the Cupertino-based company sells a phone, Munster said. The analyst noted that at the end of the quarter, iPhone Pro models still had a two weeks lead time. The December quarter iPhone results should be considered in context with the March quarter guidance, he added.

Why It’s Important: Apple’s December quarter was marred by production disruptions at the main China iPhone assembly plant of its contract manufacturer Hon Hai Precision Manufacturing Company Limited HNHPF. The company warned of shortfalls in Pro shipments in early November, citing the disruption.

Wedbush analyst Daniel Ives estimated that the China situation may have cost Apple 10-15 million units in shipments in the key holiday quarter.

Apple is scheduled to report its quarterly results on Feb. 2 after the markets close. Analysts currently expect the company to report earnings per share of $1.97, down from $2.1 in the year-ago quarter, and revenue of $122.56 billion, down 1.10%.

Price Action: Apple shares closed Wednesday’s session up 2.11%, at $133.49, according to Benzinga Pro data.

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