With Apple sales slumping, Taiwanese suppliers sink into a sea of red ink

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in iPhone
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
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

  • Reply 1 of 11
    rogifan_newrogifan_new Posts: 4,297member
    I swear 2016 is turning out to be worse than 2013 as far as D&G for Apple.
  • Reply 2 of 11
    dachardachar Posts: 330member
    A case of two many eggs in one basket?
  • Reply 3 of 11
    Cobra101Cobra101 Posts: 22member
    Well, at least Apple is still making billions and thats what is most important.

    -DED
    May, 11, 2016
    techlover
  • Reply 4 of 11
    cnocbuicnocbui Posts: 3,613member
    I swear 2016 is turning out to be worse than 2013 as far as D&G for Apple.
    I think the doom and gloom is global and Apple is just one of many statistics.  It's going to get worse.  Liz once remarked in a speech about an annus horribilus;  right sentiment, wrong year.
  • Reply 5 of 11
    paxmanpaxman Posts: 4,670member
    Not good for these companies. If supplier companies that are operating on razor thin margins go under wouldn't that be very bad for Apple, too? 
  • Reply 6 of 11
    Cobra101Cobra101 Posts: 22member
    Apple suppliers simiar to Walmart suppliers.

    They make profits while the underlings get squeezed.
    techlover
  • Reply 7 of 11
    foggyhillfoggyhill Posts: 4,767member
    Bullshit narrative.
    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!
    edited May 2016 h2p
  • Reply 8 of 11
    foggyhillfoggyhill Posts: 4,767member
    Cobra101 said:
    Well, at least Apple is still making billions and thats what is most important.

    -DED
    May, 11, 2016
    Were they fracking forced to sign? If they can't stay in business, they'll fold and Apple will buy at a slightly higher price from the survivor because there is less competition.
    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.
    edited May 2016
  • Reply 9 of 11
    Wait!

    "... 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?
  • Reply 10 of 11
    Precisely. The headline seems very misleading. Noone's talking about 'a sea of red ink' – just a downturn in revenues (and presumably profits).
  • Reply 11 of 11
    kiowavtkiowavt Posts: 88member
    I agree with Tedcranmore, what are you staying? Are you loving your AI minds??? "expect to report quarterly losses that mirror Apple's own, both in rarity and magnitude." Losses? Really?? Had they not had a super amazing quarter a year ago, this would not be an issue. Too bad they had that super amazing quarter and things cooled off a bit because of it. Who is Sam Oliver? What trolling Sam, what trolling. The losses are that you lost your minds posting this this way.
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