Shares of Inari Amertron, a Malaysian outsourced semiconductor assembly and test-services provider, experienced a decline after news of China's ban on the use of foreign-branded devices by government employees. The company's stocks were down by 5.3% to 2.84 ringgit ($0.61), reducing its year-to-date gains to 8.8%.
According to a report by The Wall Street Journal, Chinese officials have directed central government employees to abstain from using Apple's iPhone and other foreign-branded devices for work purposes. Consequently, Apple shares have also suffered, dropping 6.4% in the past two days as investors grapple with the potential implications of these restrictions.
TA Securities, an investment firm, suggests that Inari Amertron might experience a negative impact in the near future due to its association with Apple as part of the company's supply chain. Inari provides semiconductor assembly and test services to Broadcom, a client of Apple's.
However, the ban is not expected to heavily affect Inari, as TA analyst Wilson Loo explains. For every 10% decrease in smartphone sales by the "major U.S. end-customer" in China, Inari's revenue or profitability will only be impacted by 1.0%-1.7%. This suggests a manageable impact for the company.
Furthermore, Malacca Securities analyst Loui Low Ley Yee highlights another factor that may have contributed to the decline in Inari shares. The recent release of Huawei's new Mate 60 Pro smartphone, equipped with 5G-like capabilities, poses a competitive threat to Apple and could have influenced investor sentiment towards Inari.
Overall, it remains to be seen how Inari Amertron will navigate these challenges moving forward.
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