Dialog Semiconductor Plc (DLG), which makes chips used in Apple Inc. (AAPL:US)’s iPhone, fell the most in almost six months after Nikkei newswire reported that the U.S. company scaled back production plans for the smartphone.
Apple reduced its original target to order 65 million iPhone 5 handsets this quarter by about half, Nikkei said, citing an unidentified senior executive at a component maker it didn’t name. Dialog fell as much as 6.2 percent to 14.50 euros, the biggest intraday drop since July 24, and was trading down 4.3 percent at 11:21 a.m. in Frankfurt. Volume was 62 percent higher than the three-month daily average.
Dialog, which is based in Kirchheim, Germany, reported preliminary sales for 2012 on Jan. 10 that exceeded analyst estimates and raised its revenue forecast. Apple, which has its headquarters in Cupertino, California, is one of Dialog’s largest customers, accounting for about 3 percent of sales according to data compiled by Bloomberg.
“It’s not out of the question that the first quarter will be weaker if Apple adjusts its volume,” said Veysel Taze, an analyst at Close Brothers Seydler Research AG in Frankfurt who recommends investors buy the shares. “But when you consider Apple’s plan to present a cheaper iPhone toward the end of the year, that will clearly help volumes in the longer run.”
Even though European semiconductors makers look expensive, investors should add shares in the industry as inventories have probably peaked, JPMorgan Chase & Co. analysts including Sandeep Deshpande said in a note to investors today. A continued softness in most consumer end markets will probably weigh on some companies’ stocks in the short term, the analysts said.
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