Taipei, Nov. 26 (CNA) Shares of Taiwanese sapphire manufacturers moved sharply higher Wednesday morning after Chinese media reported a day earlier that Apple Inc. will use sapphire displays in the production of its next generation iPhone 7, dealers said.
The reports sparked strong interest from bargain hunters in local sapphire firms, whose share prices have been depressed since Apple confounded expectations by deciding not to use sapphire displays in its newest iPhone 6 models, they said.
As of 11:09 a.m., shares of Crystalwise Technology Inc., Acme Electronics Corp. and Highlight Tech Corp. had all risen 7 percent, the maximum daily increase, to NT$26.65 (US$0.87), NT$32.15 and NT$14.90, respectively.
The broader index on the over-the-counter market, where the three stocks are traded, was up 0.52 percent at 131.50, while the weighted index on the Taiwan Stock Exchange was up 0.09 percent at 9,124.05.
"Local sapphire stocks appeared attractive in valuations after the recent sell-off. That's why when the iPhone 7 reports surfaced, bargain hunters turned active to pick up these stocks," Asia Securities Investment Consultant analyst Chang Chih-cheng said.
"But I think the media reports on the iPhone 7 seem to be a little premature as Apple has just unveiled the two iPhone 6 models. I prefer to say the current gains are simply technical in nature," Chang said.
The China Economic Weekly reported Tuesday that the Foxconn Technology Group, also known as the Hon Hai Group in Taiwan, has signed an agreement with authorities in Zhengzhou in central China to set up a display factory next to an iPhone 6 assembly plant.
The report said the new factory is expected to manufacture sapphire displays for the next generation of Apple's smartphones.
The use of synthetic sapphire crystals for touch screens has tempted vendors because of its hardness, making it far more resistant to scratches than glass.
Apple had been rumored to be considering using sapphire displays in its two new iPhones -- the 4.7-inch iPhone 6 and the 5.5-inch iPhone 6 Plus -- and when it did not, the stocks of sapphire crystal makers plummeted.
Sources cited by the Chinese report said, however, that Apple had not given up on the idea to use sapphire displays in the next iPhone models, which could go into production next year.
"Despite the iPhone 7 report, I tend to think that local sapphire manufacturers will actually get a boost from Apple's decision to use sapphire displays in its Apple Watch, which is scheduled to hit the market next year," Chang said.
"As Apple begins using sapphire displays in the Apple Watch, other rivals may follow and apply the technology to their wearable devices, which could benefit local sapphire firms in the near future," he said.
Chang said that of the three sapphire stocks, he preferred Highlight Tech shares over the two others because foreign institutional investors have bought into the stock since the beginning of this month.
According to Chang, foreign institutional investors have bought a net 188,000 Highlight shares so far this month.
Chang cautioned that investors should be aware of a possible pullback when Crystalwise shares and Acme shares move closer to NT$26.85 and NT$36, respectively.
(By Jalen Chung and Frances Huang)