Taipei--Shares of Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads, soared Tuesday morning on news that it may become the sole assembler of Apple's most advanced next-generation iPhone, dealers said.
Along with the gains posted by contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???), also an Apple supplier, Hon Hai's upturn lifted the broader market above the 10,000-point mark at one point during the morning, they said.
As of 12:10 p.m. shares of Hon Hai, known mainly as Foxconn outside Taiwan, had risen 3.47 percent to NT$104.50 after hitting an early high of NT$105.50, with 88.36 million shares changing hands.
TSMC had gained 1.48 percent to NT$205.50 on the Taiwan Stock Exchange, where the weighted index was down 0.15 percent at 9,922.71 after hitting an early high of 10,001.94.
It was the first time the weighted index had breached 10,000 points since April 27, 2015, when it hit an intraday high of 10,002.
"Hon Hai is one of the most important suppliers to Apple, which is expected to launch its next generation of iPhones in the second half of this year," MasterLink Securities analyst Tom Tang said.
"The report on the exclusive orders from Apple to assemble the larger iPhone 8 equipped with an OLED screen simply served as a catalyst to Hon Hai shares today."
According to a South China Morning Post report, JP Morgan Asia technology analyst Gokul Hariharan said Hon Hai will secure orders to become the sole assembler of iPhones with an advanced 5.8-inch organic light-emitting diode (OLED) touch screen.
"This time around, Hon Hai is handling the model that will have the most new features," Hariharan was quoted as saying.
The report said that the two other new iPhones are models with a 4.7 inch and a 5.5-inch liquid crystal display (LCD) touch screen.
"The market is hoping that Hon Hai will be one of the biggest beneficiaries of the new iPhones. As a market laggard, it was no surprise that investors rushed to pick up the stock and I think foreign institutional investors stood on the buy side," Tang said.
Taking advantage of the stock's relatively low valuation, foreign institutional investors have bought a net 900 million Hon Hai shares since the beginning of this year to boost their holdings to 53 percent of the company from 45 percent previously, Tang said.
"Thanks to the gains posted by Hon Hai and TSMC, the market was able to withstand today the selling of heavyweights in the old economy sector," Tang said.
"The weakness of the non-high tech sector caused the weighted index to retreat from its early high after breaching 10,000 points."
As of 12:10 a.m., Formosa Plastics Corp. (??) had fallen 2.21 percent to NT$88.50, and Nan Ya Plastics Corp. (??) had lost 1.27 percent to NT$70.10.
Source: Focus Taiwan News Channel