Apple suppliers Unity, TSM move on WWDC product announcements

Unity shares rocketed higher after Apple announced its software is going to be used in its new mixed reality headset. However, chipmaker Taiwan Semiconductor's shares were flat. Yahoo Finance Live breaks down how the shares of Apple suppliers reacted to the WWDC announcements.

Video transcript

- Speaking of tech companies though, let's get back to Apple and the Apple ecosystem. Its new product announcements are sending shares for some of its suppliers like Taiwan Semiconductor and Unity Software in different directions today.

The reveal of Apple's long-awaited mixed-reality headset initially got investors excited about what the platform could mean for the partners. Now, let's take these one by one because they are really quite different stories.

Unity Software yesterday got a huge boost, and it's still one of the top trending tickers on the Yahoo Finance platform. Why? Well, basically, it's going to be a partner on the Vision Pro, and so that is good news-- seen as good news.

And seeing some analyst commentary around this, Morgan Stanley says that Unity is going to play an important role in creating new content for the Vision Pro. It's expected to create some apps for the new device. So that's why you saw that big boost to the shares yesterday.

- Yeah, huge opportunity here for Unity to continue to get this partnership right. Over the past three months looking pretty good. Up by about 20% year to date. Having a standout year as well.

And this comes off of what they had already seen in their first quarter. A strong start in 2023 is what they framed it as, with their revenue there up 56% year over year. And then additionally, giving some guidance exceeding the revenue guidance that they had provided during their previous earnings as well.

And so you've got to imagine, for Apple, being one of their huge not just potential customer success stories, but where they could net out some other major business as a result of that type of visibility through a partnership with a company like Apple as well.

- Yeah, definitely. And then in Taiwan Semi, there were-- we don't know for sure, but the implication yesterday was that Taiwan Semi is one of the main suppliers for Apple's new device. But on the flip side, Taiwan Semi is also coming out and making its own news today in it's investor day.

The chairman of the company said this year's spending will come in near the low end of its projections at about $32 billion. Now, $32 billion is still a lot--

- Yeah.

- But it's still something that people in the semi industry are paying attention to. The shares actually did not go up yesterday on the Apple announcement. They went down a little bit, and they are going down further if you look at them today here. So global smartphone shipments are also going to drop this year according to TSM's CEO, although he says that its market share will grow.

I mean, TSM is just so dominant in this space. But still, it's something to continue to really zero in on.

- I mean, it's the company that really prompted the rest of the world to figure out how it can get its fabrication processes brought online. And for the designing of chips, that's one thing, but the entire manufacturing and the fabrication of that is a totally different set of operations that Taiwan had largely been able to dominate.

And so now, you're seeing a wave of investments, whether that's triggered by being able to have more investments from state or nation-run entities into pushing more of those dollars towards some of the companies that are going to be able to fast track bringing that capacity online, one of them a company that we're about to talk about in a second here.

But at the same time, it's just a question of, for how much longer will TSM be able to box out the competition? as it seems like there is a lot of production and capacity that can be coming online very quickly over these next 18 months or so.

- Yeah. And obviously, there's some geo-pol risk associated with them too, which they were asked about at that investor day.