Apple and Suppliers Face Unanticipated Sales Slump Despite New Launches

In a surprising turn of events, Apple Inc AAPL and its key suppliers in Taiwan are facing a significant sales slump despite the recent launch of the new iPhone and various Android devices. 

Taiwan Semiconductor Manufacturing Co TSM, the leading contract chipmaker, experienced a 13.4% sales drop, a figure that, while concerning, is better than initially feared. 

The broader group of major assemblers and component makers saw a sharper decline of 16.4%, plummeting to NT$1.24 trillion ($38.7 billion) from the previous year, according to data compiled by Bloomberg. 

The resilience of TSMC probably reflects the sustained demand for artificial intelligence accelerators it produces for Nvidia Corp NVDA, Bloomberg reports.

Also Read: Apple Faces Growing Threat from Resurgent Huawei Amid Semiconductor Breakthrough

Leading the downturn, device assemblers Hon Hai Precision Industry Co, Compal Electronics Inc, and Quanta Computer Inc faced significant declines. In contrast, Pegatron Corp noted a slight growth in September, a recovery from a dismal performance in August. 

The overall decline, the steepest since June, has resulted in an 8.8% slump for the first nine months of the year.

The release of Apple's iPhone 15 generated a positive buzz, yet it wasn't enough to offset the decline. The enhancements in the entry-level model were well-received, but the excitement was tempered by the ongoing challenges faced by smartphone makers globally. 

Companies like Xiaomi Corp XIACF XIACY, Oppo, and Honor Device Co are also expanding their portfolios, yet the industry is grappling with a slowdown that began in 2022.

The AI industry's growth, particularly in server sales, is anticipated to double in 2024, offering hope in these challenging times.

Price Action: TSM shares traded higher by 0.20% at $92.18 premarket on the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.