Apple iPhone hits handset makers' shares

Apple Computer Inc. Chief Executive Officer Steve Jobs holds the new iPhone in San Francisco, California January 9, 2007.

SEOUL/HELSINKI (Reuters) - Shares in mobile phone makers including Nokia, Samsung Electronics and LG Electronics slipped on Wednesday on worries about their ability to compete with Apple Computer's new iPhone.

But handset component makers such as Taiwan's Catcher Technology, as well as some telecom operators such as Japan's Softbank Corp., gained on hopes the iPhone would replicate the runaway success of Apple's iPod.

Flash memory chip makers like Japan's Toshiba Corp. and South Korea's Hynix Semiconductor Inc. may end up benefiting should the iPhone capture the hearts of consumers when it goes on sale in the United States in June.

"For the handset makers, those who are seen to be competing handset makers look vulnerable. Most concerning would be the high-end guys," said Malcolm Wood, regional strategist for Morgan Stanley in Hong Kong. "But those companies in the supply chain for the iPhone will be protected."

Apple is introducing its mobile phone as global handset makers are already under intense pressure, with Motorola Inc.'s profit warning last week signaling a tough year ahead.

Shares in Nokia, the world's top handset maker, fell 2.2 percent to 14.63 euros at 0935 GMT, while Sweden's Ericsson was down 1.4 percent.

"It's a short-term sentiment impact. It's a much hyped story. Apple's a great marketing machine, but from the sheer volumes, it's not going to make a huge difference," said a trader in London.

Shares in chipmaker Infineon rose to a 2-1/2 year high but the company declined to comment on whether it would supply chips for the Apple phone. The stock pared gains to trade up 0.6 percent at 11.01 euros.

Infineon has said it has an unnamed new client for a high-end handset platform, and JPMorgan analyst Sandeep Deshpande said that if this was Apple it could generate $77-$87 million for Infineon this year.

Germany's Balda said it would supply touch-screens for the Apple phone, sending its shares up more than 9 percent.

Shares of mobile phone makers in Asia fell, with LG Electronics Inc. dropping 2.7 percent, its biggest one-day fall since October 18, compared with a 1.4 percent decline in the South Korean benchmark KOSPI.

Samsung Electronics Co. Ltd. fell 1.37 percent to 577,000 won, becoming the biggest weight on the index and marking its lowest close since June 23.

"The question is how competitive Apple's products will be. Its competitors will have six months to think what to do. I don't think Apple's phone will be launched in a vacuum," said Evli bank analyst Ilkka Rauvola in Helsinki.

BUZZ FACES REALITY

Apple's brand power and its prior success in marrying sleek design with functionality have bolstered optimism about the iPhone's prospects, boosting shares of its potential suppliers.

In Taiwan, Catcher Technology, a maker of casings for laptops and mobile phones, surged 5.22 percent, far outperforming a 1.17 percent fall in the main TAIEX share index.

Japanese retail investors, who make up the bulk of Softbank's shareholders, sent the mobile operator up 0.4 percent, against a 1.7 percent drop in the Nikkei, as they bet the company would be the most likely to release the iPhone in Japan.

Flash memory chip makers could also benefit, analysts said.

"This is very positive for the chip makers. The iPod has helped drive a good part of the sales of flash memory. If the iPhone also proves successful, it could drive up demand of the chips," said Chung Kyun-sik, chief investment officer of Yuris Asset Management in Seoul.

But some analysts also warned against over-reacting.

"Apple may be able to grab around 1 percent of the handset market share with this phone, but they face much more competition compared to the iPod market," said Credit Suisse analyst Kevin Chang in Taipei.

Apple Chief Executive Steve Jobs said he expected the company to sell 10 million iPhones by end-2008, a tiny fraction of the 1 billion handsets sold globally per year, analysts said.

(Additional reporting by David Dolan in Tokyo, Sheena Lee in Taipei, Ian Chua in Hong Kong, Sophie Hares in London, Jens Hack in Munich, Georgina Prodhan and Catherine Hornby in Frankfurt)