Shares in Goertek Inc tumbled on Wednesday after the China-based electronics supplier said an overseas client had asked it to suspend assembly work for a smart acoustic product, which analysts identified as the Apple AirPods Pro 2.
Goertek said late on Tuesday it had received the notice from a "major overseas client". The suspension would impact up to 3.3 billion yuan ($455 million) in revenue, equivalent to about 4.2% of the company's total revenue in 2021, it said.
Shares in Goertek fell by their maximum, triggering a trading suspension in accordance with exchange rules.
In a note to clients, analysts from Jefferies said their inquiries had revealed that the product was the AirPods Pro 2, a wireless earphone set.
"The issue is more of a technical one, instead of a demand problem," Jefferies analysts wrote, adding that both Goertek and Luxshare had been impacted.
Another Apple supplier, Luxshare, had been able to quickly fix the problem and resume production, but Goertek was still in the process of overcoming the difficulty, working with an Apple engineering team on site, they said.
"At the moment, there are no order cuts or Goertek being so-called 'kicked out' of the customer's supply chain," they said.
Ming-Chi Kuo, an Apple analyst at research firm TF Securities, said that, according to his checks, the product involved could be AirPods Pro 2. "Goertek's suspension of production is more likely due to production issues rather than demand issues," he said.
Apple and Goertek, whose clients also include Meta Platforms, Samsung and Microsoft, did not immediately reply to requests for comment.
Shares in Luxshare and AAC Technologies initially jumped as high as 4.6% and 14.6%, respectively, before paring gains. The two companies were up about 0.3% and 2.6%, respectively, near the end of the afternoon session.
Source: Reuters
Image source: VIR
