Major Asian chip manufacturer, Taiwan Semiconductor Manufacturing (NYSE: TSM) reported weaker than expected financial results for its first quarter results, which led to it lowering its second quarter and full year guidance. The downgrade caused a shakeup in the technology sector, especially Apple Inc. (NASDAQ: AAPL), Nvidia Corporation (NASDAQ: NVDA) and Intel Corporation (NASDAQ: INTC).

TSMC manufacturers and supplies chips for many technology companies, making it one the global suppliers in the industry.

Apple shares fell by 2.3 percent, Nvidia shares fell by 3 percent and Intel fell by 3.1 percent late morning on Thursday.

TSMC forecasts revenue to fall between $7.8 billion and $7.9 billion, well below analysts’ estimates of $8.8 billion.

“Moving into second quarter 2018, continued weak demand from our mobile sector will negatively impact our business despite strength in cryptocurrency mining. Based on our current business outlook, management expects the overall performance for second quarter 2018 to be as follows” said Lora Ho, SVP and Chief Financial Officer of TSMC.

Morgan Stanley analysts said that Apple’s iPhone was the main reason for Taiwan Semiconductor lowered guidance.

"Smartphone semi weakness [is] the main reason for the revenue shortfall," Morgan Stanley analyst Charlie Chan wrote in a note to clients Thursday. "Beside the order cuts from the current Apple iPhone X processor, we attribute the major revenue shortfall in the smartphone segment to key customer MediaTek ... and around a month's delay of Apple's new 7nm processor to July."

Susquehanna analyst Mehdi Hosseini wrote to the clients that the firm lowered its estimates for TSMC attributable to a  “steeper than expected inventory digestion by premium Smart Phone customers, particularly Apple."

TSMC’s downgrade for the fiscal year shows an upcoming weak demand for mobile devices. The first quarter already showed signs of slowed growth after the company reported weaker than expected results.

The technology stocks dragged down the S&P 500 Index by 0.65 percent and the Nasdaq Composite by 0.67 percent.