AAC Technologies: Skeptical on Acquisition and Smartphone Slump Is Prolonged

Over the past decade, AAC has benefited from the rise of Apple, which accounts for around half of the firm’s sales, by supplying acoustics and haptics components to the phonemaker and its laptop casing, through the Toyo Precision acquisition. However, AAC has had to endure a slowdown in the adoption of the new speaker and touch feedback technologies by Apple and intensifying competition within Apple’s supply chain. As a result, we estimate its return on invested capital will decline to negative 3.8% in 2023 from 33.1% in 2013.