Apple suppliers tumble on new signs of weak iPhone demand

14 November, 2018, 05:37 | Author: Teresa Adams
  • Credit Getty Images  Apple

As Reuters reports today, many of Apple's suppliers "have lowered numbers due to their unnamed 'largest customer, ' which is Apple".

The company did not name the chipmaker, but is a major supplier to US -based Lumentum Holdings Inc (LITE.O) which slashed its forecasts on Monday and said that one of its largest customers would "materially reduce" shipments for the current quarter.

Among other Apple suppliers in the region, Hong Kong-based acoustic components maker AAC Technologies Holdings Inc fell more than 6 percent.

IQE (IQE.L), whose semiconductor products are used in Apple Inc's (AAPL.O) latest iPhones, forecast a 16.4 percent decline in full-year profits, citing a drop in orders at a major chipmaker which supplies 3D sensing technology.

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Lumentum, whose shares crashed 30 percent on the warning, didn't specifically mention Apple in its statement.

Following a poor forecast earlier this month, analysts and investors voiced concern over the state of Apple's business, contributing to growing worries that iPhone sales were stagnating and could hurt suppliers.

Apple shares were trading down 4.2 percent early Monday afternoon, at $195.90, wiping close to $40 billion off the company's market cap.

"Apple could have accumulated too much Lumentum inventory, and needs to work it off, in which case the unit shortfall is less, although it is still indicative of weak iPhone sales". Apple - for the first time ever - refused to release sales numbers for the XR, XS, and XS Max during its recent earnings call, but other industry sources point to the new iPhones (and the XR in particular) not meeting sales expectations.

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However, it's important to note that Kuo is not saying Apple will sell 30 million fewer iPhones during the holiday quarter.

Lumentum's outlook comes a week after Nikkei reported that Apple was cancelling a production boost for its iPhone XR line, and less than two weeks after Apple's fourth-quarter results showed tepid unit sales growth.

The iPhone XR also seems to be facing competition from Apple's own premium iPhone XS and iPhone XS models as users prefer the narrower bezels and better cameras on these phones.

'Although Apple has positioned itself as a super-expensive handset maker providing high-end products, its strategy has not been working in emerging markets including China and India as Chinese vendors have been making iPhone-like products'.

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