What's going on?
Strong first-quarter results from leading microchip-maker TSMC on Thursday hinted that Apple – one of its biggest customers – might be able to keep already-stretched doctors away for the rest of the year.
What does this mean?
TSMC lowered its revenue forecast for 2020, but said it expected 30% growth this quarter compared to the same time last year. That’s pretty revealing: the chipmaker’s two biggest customers represent around 40% of its revenues, and Apple – which uses its high-end microchips in iPhones – is probably one of them. So if TSMC expects to grow sales despite the rapidly weakening economic environment, it stands to reason Apple should too.
TSMC leads the way in selling chips for everything from datacenters to video streaming, which means it’s seen as a bellwether for other chipmakers globally. Those chipmakers have good reason to feel more optimistic about the months ahead, then – especially if Apple’s rivals start rolling out their own new chip-laden smartphones.
Why should I care?
For markets: Buy the chip.
Investors – buoyed by the potential good news for chipmakers tucked away in TSMC’s update – set about buying their stocks. Dutch-American ASML saw its shares rise by about 2%, about the same as AMS’s stock over in Europe. Some investors bought up Apple’s stock too: they may be hoping the smartphone giant’s newly announced cheaper iPhones will tempt consumers who previously couldn’t afford one, and that the company’s 5G iPhone will generate strong sales this fall.
The bigger picture: Nike’s off the pace.
Official data showed iPhone shipments within China rose 19% last month, which could mean demand for Apple’s products has picked back up even faster than it did for Nike. That would make sense: folks in China – who might still be hesitant about going to the gym – are less likely to want new workout gear than they are a new phone that they can enjoy indoors.