Published: Wed, November 14, 2018
Finance | By Jaime Brady

Apple's Asia suppliers fall amid fears of weak iPhone sales

Apple's Asia suppliers fall amid fears of weak iPhone sales

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. Rival Pegatron Corp fell more than 5 percent but later recouped losses.

The latest evidence that what's bad for Apple can be awful for suppliers came on two continents within hours of each other.

"Some people may fear that this now means that the iPhone units are going to start going negative year over year because it's easier to talk about great things and not show the details of things that aren't so great", Citi analyst Jim Suva said during the conference call. That makes them more likely to cut prices when Apple comes back to the negotiating table.

As three key Apple suppliers have slashed their revenue forecast amidst slowing iPhone sales, the Cupertino company's shares have fallen to their lowest in three months.

'With no new technology in sight next year for the supply chain, this is not ideal for the companies involved, ' said Nicole Tu, a Taipei-based analyst at Yuanta Investment Consulting.

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Longtime Apple analyst Ming-Chi Kuo cut his forecast for iPhone XR shipments by 30 million units, signaling weak demand for the budget handset, according to MacRumors. Japan Display lowered both sales and margin outlook for the year as well. Shares of Lumentum plummeted a record 33 per cent while Apple dropped 5 per cent. Oclaro Inc., which is being bought by Lumentum, lost 12 per cent, its biggest drop since April.

Apple said earlier this month it would stop giving the number of iPhones, iPads and Mac computers it sold in a quarter, a closely watched metric and a key indicator of the company's success.

Blaming foreign exchange costs and weakness in emerging markets like India, where customers are ditching iPhones for cheaper Chinese alternatives, Apple has already warned its investors that holiday sales would miss Wall Street expectations.

"The legacy iPhone models forecast is likely to increase significantly thanks to more affordable prices; the total iPhone shipments in 1Q19 are likely to see a YoY decline", Kuo continued, citing Career and Nissha Printing as two suppliers that might be affected by Apple's cuts. BofA added that new the iPad Pro also uses FaceID, so the announcement may not be directly translated to iPhone production.

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