Apple supplier IQE warns on profits in sign of tough smartphone market

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

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.

For iPhone XR, the estimate has gone from 100 million to 70 million for fourth quarter 2018 to third quarter 2019, which is a drastic cut.

"IPhone XR parts suppliers such as Career and Nissha printing would be "the major losers resulting from the XR cut because these two firms can not benefit from the increased shipment estimations of legacy models", added the report.

Major suppliers to Apple Inc.'s iPhone fell Monday as investors fretted that one of the most important product lines in the technology sector was seeing weak demand. 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. While this explains the reduction in order, there's no denying the slowdown in iPhone sales. In its most-recent quarter, Apple reported nearly no increase in the number of iPhones sold, but revenue from that business jumped 29 per cent from a year earlier.

"We think there is an inventory component that is still negatively affecting the supply chain", UBS said, indicating that Apple may be as many as 10 million units shy of what Wall Street had initially expected.

More news: California wildfires leave several dead, force thousands to flee

For the first quarter of 2019, January to March, Kuo believes that Apple will see a year-over-year decline in iPhone shipments.

However, the iPhone XR doesn't seem to be doing too well right now.

The share price of Apple has plunged by 5% today as investors worry that the iPhone is not as popular as it used to be.

"Apple is no longer a traditional hardware business", said Gene Munster, a veteran Apple analyst at Loup Ventures. "But [these results are] about to be more than offset by a big jump in ASPs (+17%Y/Y in FY18), which ultimately drove Apple's best iPhone revenue growth in 3 years, we rather now find that setup flipped with "growth via ASPs" widely known but just as those ASPs start to anniversary". Apple said it preferred to focus on the company's transition to a services company, with regular recurring revenue.

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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