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Fears of peak iPhone rattle Asian Apple suppliers

15 November, 2018, 08:24 | Author: Lawrence Cooper
  • Apple Inc. iPhone XR smartphones sit on display at a Soft Bank Group Corp. store in Tokyo Japan on Friday Nov. 2 2018.        , Bloomberg

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

Among other Apple suppliers, Cirrus Logic Inc. sank 14 per cent, Qorvo Inc. and Broadcom Inc. each slid 6.4 per cent, ON Semiconductor Corp. fell 5.9 per cent, Skyworks Solutions Inc. fell 5 per cent, and Finisar Corp. dropped 4 per cent. Semiconductor stocks were broadly lower with the Philadelphia Semiconductor Index losing 4.4 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. Hon Hai joins a string of Apple suppliers that have warned of a worsening outlook as iPhone volumes plateau alongside a lethargic smartphone market. Then Lumentum Holdings Inc., a top maker of iPhone facial-recognition sensors, lowered its second-quarter outlook and said a key customer had cut orders.

A man holds two boxes for the Apple's new iPhone X which went on sale today, at the Apple Store in Regents Street in London, Britain, November 3, 2017.

Apple analyst Ming-Chi Kuo says part of the blame for the slow XR sales is competition from Huawei.

Apple's iPhone XR might not be the hotseller that analysts had predicted with noted analyst Ming-Chi Kuo slashing shipment forecast for the device.

Still, he said more consumers may be opting to purchase the higher-end iPhone XS models or the lower-end iPhone 8 model instead.

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Early in the year, the company confirmed it had been intentionally throttling the speeds of some older phones to avoid battery-related problems.

Adding to Monday's negative news, Longbow Research cautioned that Apple is facing weak iPhone demand in China.

The main assembler of iPhones reported net income of NT$24.9 billion (US$806 million) in the September quarter, about 12 per cent below the average analysts' estimate.

Apple CEO Tim Cook was directly asked about this possibility during Apple's most recent conference call.

JPMorgan analysts said iPhone unit sales could decline on an annual basis in both 2018 and 2019 due to weak demand in emerging markets.

In a world where iPhone demand is on the wane, Apple Inc. has a Plan B. As customers wait longer between upgrades and the smartphone market saturates, Apple can fall back on charging higher prices for each handset and raking in more money from services such as streaming music, digital videos and data storage.

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