Taiwan Semiconductor Manufacturing Company Limited’s TSM quarterly results have a bearing on Apple Inc.’s AAPL financials, given the latter accounts for 25% of the former’s revenue.
What Happened: Sifting through the Taiwanese foundry’s fourth-quarter results released on Thursday, Loup Funds’ Gene Munster suggested he is positive about Cupertino’s fundamentals.
See Also: Everything You Need To Know About Apple Stock
Bad And Good News: Apple is likely to give a soft outlook when it reports its fiscal year 2023 first-quarter results on Feb. 2, Munster said in a note. The negative tidings, however, will be fractional and short-term, he added.
The key takeaway from the Asian chipmakers’ results, according to the analyst, is that the iPhone franchise and its long-term growth prospects absolutely remain intact.
Specifically, Munster expects Apple’s March and June quarter results to fall slightly below Street estimates and the back-end of the year to exceed expectations.
June To Mark Bottom: Given the 6% jump in TSMC’s stock on Thursday in reaction to the report, it appears that investors looked past the cautious first-half outlook and concluded that its commentary for 2023 was positive, Munster said.
TSMC’s March quarter outlook calls for a 3% year-over-year decline for its smartphone segment, the analyst said. The Street is now modeling iPhone growth for the quarter to be down 0.3%. As typically TSMC’s smartphone segment grows faster than iPhone revenue, the analyst sees a slight downside to iPhone revenue for the March quarter.
For the June quarter, as opposed to TSMC’s commentary indicating a 13% decline in smartphone segment revenue, analysts expect a 1.2% drop in iPhone revenue, Munster said. The decline for Apple may not be as steep as TSMC’s forecast, as channel inventory drawdown may likely account for much of the decline the company expects.
The Street forecast of 3.4% iPhone revenue growth in the September quarter, according to Munster, could prove conservative, going by the optimism relayed by TSMC over the back half of the year.
For 2023, the Loup Funds co-founder expects iPhone revenue to be better than what is implied by the consensus estimate for a 0.3% decline.
Price Action: Apple closed Thursday’s session down 0.06%, at $133.41, according to Benzinga Pro data.
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