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This Apple Supplier Just Dropped A 'Bombshell' And It's Not Good

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This Apple Supplier Just Dropped A 'Bombshell' And It's Not Good
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The most valuable company in the world generates a lot of press, so naturally, its suppliers are drawn into the spotlight. On Monday evening, Apple Inc. (NASDAQ: AAPL) supplier SK Hynix dropped what analysts are calling a "bombshell" that could signal more downside is in store for investors.

The South Korea-based company, which provides chips for the iPhone 6 and some MacBook computers, said it expected first quarter NAND bit shipments to be down 10 percent quarter-over-quarter. While Hynix's Q4 results were in line with what Wall Street was expecting, Sig Susquehanna analyst Mehdi Hosseini called the guidance a shock in a new report.

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"What is surprising is the company's 1Q16 NAND bit shipment guide of down at least 10% Q/Q, which we attribute to the recent Apple cuts," Hosseini wrote. As a result of the guidance, the analyst is lowering his estimates for SK Hynix further.

Hosseini also called the Chinese smartphone market a "mixed bag," but didn't speak on Apple-related weakness in the country specifically.

Broader Weakness For Apple Suppliers

Hynix's share price has been nearly cut in half since the middle of the second quarter of 2015, mirroring broader weakness in the semiconductor space. The company's last major positive news was a first quarter earnings beat on the back of -- at the time -- better than expected shipments of components for Apple's iPhone 6.

SK Hynix shares are down 25 percent over the past six months, while Apple has lost 18 percent over that time period. Cirrus Logic, Inc. (NASDAQ: CRUS), another Apple supplier, has seen its investors lose nearly 15 percent in six months, while Skyworks Solutions Inc (NASDAQ: SWKS) is down almost 30 percent.

Latest Ratings for AAPL

DateFirmActionFromTo
Jan 2017GuggenheimInitiates Coverage OnBuy
Dec 2016PiperJaffrayAssumesOverweightOverweight
Oct 2016Goldman SachsMaintainsBuy

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