Apple, suppliers tumble as signs mount of weak iPhone demand

Credit Getty Images  Apple

I can't really imagine many prospective iPhone XR buyers being hesitant to pull the trigger because the device lacks a dual-camera and sports slightly larger bezels.

"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", he said. In its most-recent quarter, Apple reported nearly no increase in the number of iPhones sold, but revenue from that business jumped 29 percent from a year earlier.

Based on Lumentum forecast, analysts have deduced that there is an 18 to 20 million reduction in iPhone orders from Apple.

That's the situation Apple was in Monday. As Reuters reports today, many of Apple's suppliers "have lowered numbers due to their unnamed 'largest customer, ' which is Apple". Now that forecast is being echoed by TF Industries' Ming-Chi Kuo.

Early in the year, the company confirmed it had been intentionally throttling the speeds of some older phones to avoid battery-related problems. Qorvo Inc. slid 7.3 per cent, Skyworks Solutions Inc. fell 2.8 per cent, Finisar Corp. dropped 4.7 per cent and Broadcom Inc. fell 5.3 per cent. Semiconductor stocks were broadly lower with the Philadelphia Semiconductor Index down 3 per cent. 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. Apple beats consensus estimates for shipments anyway most quarters. Lumentum didn't identify the customer and a spokesman for the company declined to comment, but Apple is its biggest customer, according to data compiled by Bloomberg.

"For Apple, the iPhone shipment has reached its peak". Analysts said that this could only refer to Apple. But when a sale does happen, suppliers get a one-time payment for their component, while Apple can generate hundreds of extra dollars per gadget. "This raises an incremental risk for the rest of the supply chain". But these services are not additional revenue sources for component suppliers. One supplier cutting its outlook doesn't necessarily mean iPhone demand is down.

The report noted that Apple's directive translates to about 100,000 fewer iPhone XRs being made each day.

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