Shares of key Apple suppliers TSMC and Foxconn are in the red following an abrupt dip in Apple's stock.

Apple’s shares (AAPL) have fallen over 4.2% since the start of 2024 after recent analyst downgrades. The company has found itself in a tough spot with declining sales and facing regulatory scrutiny. Consequently, the decline has also affected the stock performance of its key suppliers, Foxconn and TMSC.

Why 2024 Could Be Challenging for Apple

Apple’s stock beat the market again in 2023, but a closer look at its business performance reveals a different story.

The tech juggernaut reported a sales decline every quarter of the past fiscal year, marking its longest losing streak in decades. In addition, Apple is lagging behind its tech counterparts in the burgeoning artificial intelligence (AI) space, raising questions about what has fueled the stock’s surge of more than 50% last year. 

Also, the company is grappling with regulatory challenges. Last month, China extended its ban on using iPhones and other foreign devices, ramping up efforts to restrict the world’s largest company’s presence in the world’s largest mobile market.

The company is also facing a series of regulatory decisions by US and EU authorities in the coming months about the future of its lucrative services segment. One of the highlights of this issue is the antitrust trial against Google, which revealed that the tech giant paid over $26 billion in 2021 to secure its search engine as the default on Apple devices and other smartphones and browsers.

As a result of these headwinds, some analysts have been cooling off on Apple. Barclays strategists led by Tim Long downgraded the company’s stock to Underweight and reduced the price target to $160, citing waning iPhone demand as a primary reason. 

Apple shares saw a significant dip following the downgrade, closing at the lowest level in two months. 

Still, there are always reasons to be optimistic about Apple. The regulatory decisions are not imminent, and although overall smartphone sales declined in 2023, the premium market grew 6%, according to Counterpoint Research. Moreover, the Cupertino, California-based heavyweight is set to launch its VR headset this year, Vision Pro, offering a way to enter a brand-new tech market. Apple will also roll out a new iPad and possibly a generative AI software integrated into its devices.

Apple’s Dip Sends Foxconn, TSMC, and the Broader Market Into the Red

Apple’s business challenges and poor display in the first trading days of 2024 affected its key suppliers.

Shares of Foxconn, Apple’s supplier that assembles its iPhones, fell around 0.4% in the past five days. Similarly, TSMC, a Taiwan manufacturer that produces custom chips for Apple, fell over 2% during this period.

Because of its colossal size, Apple’s recent dip has affected the entire market, with all major indices being in the red since the start of the year. 

Considering a series of challenges it is currently facing, what are your expectations for Apple’s stock performance in 2024? Let us know in the comments below. 

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