Apple Inc. (NASDAQ:AAPL) saw its share price drop nearly 3% on Thursday as one of its big chipmakers forecasted a drop in sales. Taiwan Semiconductor Manufacturing (TSMC)’s CFO Lora Ho said that “Moving into second quarter 2018, continued weak demand from our mobile sector will negatively impact our business.” The company is involved in manufacturing chips for Apple and analysts believe poor demand for the iPhone is a key part of the underwhelming forecast for Q2.
While the softer forecast is about $1 billion less than what was initially expected by analysts, sales are still expected to reach as high as $7.9 billion. The concern for investors is that this may be a sign that Apple’s popularity is starting to decline, especially as we are seeing carriers less willing to subsidize the price of phones, making it harder for consumers to justify spending a significant amount of money for a device that may not be a big upgrade from the prior year’s model.
Ultimately, Apple still has a very strong market share when it comes to handheld devices and the loyalty consumers have for its brand is unparalleled. Because of this, the company does not have to spend a lot on research and development anymore as it can instead focus on novelties that attract the interest of its customers, rather than having to make significant changes in order to grow sales.
Even with the dip in forecast, Apple remains a great buy and it’s not in any danger of falling out of favour with its loyal customer base anytime soon.
