With Apple sales slumping, Taiwanese suppliers sink into a sea of red ink
The rapid development of Taiwan's technology sector has been fed in no small part by Apple's nearly insatiable demand for components and complex manufacturing processes, but the ride has turned rough for many of the island's tech firms.
Image Credit: Bloomberg
Consternation over falling iPhone and iPad sales isn't limited to Cupertino, according to the Nikkei Asian Review. Nearly all of Apple's major suppliers -- a list which includes most of Taiwan's largest tech companies -- have reported or expect to report quarterly losses that mirror Apple's own, both in rarity and magnitude.
Of 19 Apple suppliers tracked by Nikkei, 15 saw year-over-year declines. iPhone sales saw their first-ever decline last quarter, falling from 61 million handsets shipped a year ago, to 51.2 million units in the March 2016 quarter.
Affected firms include many relatively smaller players like camera component supplier Largan Precision -- which blamed a "significant scale-back of orders from a major customer" -- and display company AU Optronics, though the damage goes up and down the supply chain. Even huge and diversified OEMs like TSMC and Pegatron have been caught up in Apple's ebbing tide.
Some believe that the worst may not be over.
"We all know that the first half is terrible. We are not very optimistic about the second half either and we doubt whether Apple's new iPhone 7 can become a hit," Fubon Securities analyst Arthur Liao told Nikkei.
Many of these companies have little latitude to make changes. Turning Apple away means losing an effectively irreplaceable amount of business, especially as the second-largest player -- Samsung -- does much of its own manufacturing.
Image Credit: Bloomberg
Consternation over falling iPhone and iPad sales isn't limited to Cupertino, according to the Nikkei Asian Review. Nearly all of Apple's major suppliers -- a list which includes most of Taiwan's largest tech companies -- have reported or expect to report quarterly losses that mirror Apple's own, both in rarity and magnitude.
Of 19 Apple suppliers tracked by Nikkei, 15 saw year-over-year declines. iPhone sales saw their first-ever decline last quarter, falling from 61 million handsets shipped a year ago, to 51.2 million units in the March 2016 quarter.
Affected firms include many relatively smaller players like camera component supplier Largan Precision -- which blamed a "significant scale-back of orders from a major customer" -- and display company AU Optronics, though the damage goes up and down the supply chain. Even huge and diversified OEMs like TSMC and Pegatron have been caught up in Apple's ebbing tide.
Some believe that the worst may not be over.
"We all know that the first half is terrible. We are not very optimistic about the second half either and we doubt whether Apple's new iPhone 7 can become a hit," Fubon Securities analyst Arthur Liao told Nikkei.
Many of these companies have little latitude to make changes. Turning Apple away means losing an effectively irreplaceable amount of business, especially as the second-largest player -- Samsung -- does much of its own manufacturing.
Comments
-DED
May, 11, 2016
They make profits while the underlings get squeezed.
Most of those suppliers are not just "Apple suppliers".
Also, if margins are thin its because its highly competitive; that means many of them should probably not be in business anyway.
I also find it so god damn funny that its never the fault of those idiot companies who signed those contracts if they can't make money, but the fault of their clients!
That's how it goes in good ol' capitalism.
BTW, we had the same BS narrative during the Iphone 5 era when Samsung and the likes were gaining market share.
"... have reported or expect to report quarterly losses that mirror Apple's own, both in rarity..."
Apple did not have quarterly losses, they made 10 billion dollars. Are you saying that these companies will also just simply have negative growth? Or do you mean they will have actual losses? They could have negative growth just like Apple. They could have negative net income that is not like Apple. That what losses are… That's very different. What are you saying?