Apple, suppliers tumble as signs mount of weak iPhone demand

Daniel Fowler
November 13, 2018

"For Apple, the iPhone shipment has reached its peak".

"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.

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 Holdings reduced its forecast revenue for Q4 by $70 million.

"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.

Japan's Nikkei reported earlier this month that Apple had told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR, the cheapest of this year's new launches. Apple's shares are down more than $9 this morning, crossing under the $200 mark for the first time in months.

Apple cautioned earlier this month that it could miss Wall Street estimates for the holiday shopping season.

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Citi also cut its target on Qorvo on Monday due to iPhone XR weakness.

The slide may also reflect concerns that Apple knows that iPhone unit sales are going to go negative in the short-term, which is why it chose to stop reporting unit 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.

Analysts interpreted the move as an indicator that Apple may have 'something to hide'.

Apple's iPhone XR, which boasts the iPhone X's edge-to-edge display, is based on older LCD pixels instead of the X's high-resolution OLED screen.

Apple CEO Tim Cook was directly asked about this possibility during Apple's most recent conference call. Jobs, for all his faults, did manage to save Apple with a couple of products which worked - the iPod and iPhone - but even he was running out of ideas before the end (iPads anyone?) and the issue of what to do next was never resolved.

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