Another Apple supplier slashes revenue forecast, prompts speculation of weak iPhone demand...

Posted:
in iPhone edited November 15
Speculation of lower than expected iPhone demand continues to weigh on Apple stock prices as yet another component supplier, AMS AG, cuts revenue estimates for the current quarter. Three other key Apple suppliers reduced their respective forecasts this week.

iPhone XS Max
iPhone XS Max


Citing "recent demand change from a major consumer customer," Austria-based AMS on Wednesday reduced expected revenue to between $480 million and $520 million, down from estimates of $570 million to $610 million provided last month, for the important holiday quarter, according to Bloomberg. AMS supplies Apple with ambient light sensors for iPhone.

A similar explanation was offered by both Japan Display and Lumentum, suppliers of iPhone screens and Face ID 3D sensors, respectively, when they slashed forecasts on Monday. Chipmaker Qorvo, which supplies iPhone RF hardware, also forecast reduced earnings this week.

While there is no hard evidence of a drawdown in iPhone orders or a weakness in sales of the devices, reduced earnings estimates from key providers have stoked concern about the health of Apple's handset business. Component pricing, supplier diversification and Apple's overall manufacturing strategy create a muddled calculus for analysts to parse, meaning perceived weakness from certain production partners might not necessarily equate to lower sales volumes -- and has not in the past.

That said, Apple has struggled in recent quarters to boost iPhone sales as major markets become increasingly saturated. Last quarter, Apple's iPhone sales were up by a single percent year-over-year, and came in flat for the just ended fourth quarter. At the same time, the market as a whole is contracting, and Apple is one of the few vendors to effectively hold ground or lose less ground than the contraction percentage.

Apple added fuel to concerns over plateauing iPhone growth earlier this month in announcing it would no longer report unit sales for iPhone, iPad, and Mac. Unit volumes are used by analysts to calculate average selling price and gauge demand for Apple products over time. Without these figures, market watchers are left to speculate based on supply chain intel, information that is circumstantial at best.

Amidst the immediate slowdown in unit growth, Apple has managed to substantially bolster revenue not by reducing prices, but by increasing them. The plan has been successful thus far, with the premium priced iPhone X goosing ASPs to an all-time high of $793 in quarter four. That trend is expected to continue with XS, XS Max and the "mid-tier" iPhone XR, which starts at $749.

It remains to be seen whether the XR will be the home run Apple bulls were hoping for. Initially predicted to be the most popular of Apple's 2018 iPhone lineup, recent estimates cast doubt on the handset's market performance. On Monday, TF Securities analyst Ming-Chi Kuo became the latest analyst to cut XR sales predictions to 70 million units, down from 100 million units expected in October. He cited the looming trade war with China, customer anticipation of a next-gen XR and increased competition as factors in decreased demand.

Comments

  • Reply 1 of 7
    More continue vague language being attributed to Apple, never mind Chinese sales from Alibaba were booming. Perhaps the press should look at the competitors to these suppliers?
  • Reply 2 of 7
    If the iPhone turn out not to be selling well, that's likely attributed to the XS being a S upgrade and still that high $1000 price tag. I would assume the XS Max and XR would balance that out, but it's probably not all that popular given the X was unexpectedly popular last year, making it something that they can catch up to next year(assuming most people update every other year).

    It would still be nice to see a $50 to 100 drop on the XS successor, but given that didn't happen this year, and the XR is a $50 jump from the 8, it isn't likely.
  • Reply 3 of 7
    Those with extra cash bought the Xs n Xs Max.. those on a budget are waiting for the holidays and/or possible specials from the carriers. I myself have two aging iPhones and we plan on getting two new iphone Xr’s they’ll be an improvement drastically over what we have but not kill the budget. But we are waiting probably until december just as many of my friends.. i’m sure Apple will make nice profit this next quarter.. maybe not what the greedy as fck wall street people expect 
    ZRyser
  • Reply 4 of 7
    Please, speculate away for a couple more weeks. I'd like to unload some excess $ onto AAPL.
    If you guys could make it go around or below $180 per, that'd be really appreciated. Anyway, keep up the good work, media.
    Thrashman
  • Reply 5 of 7
    epicurus said:
    Those with extra cash bought the Xs n Xs Max.. those on a budget are waiting for the holidays and/or possible specials from the carriers. I myself have two aging iPhones and we plan on getting two new iphone Xr’s they’ll be an improvement drastically over what we have but not kill the budget. But we are waiting probably until december just as many of my friends.. i’m sure Apple will make nice profit this next quarter.. maybe not what the greedy as fck wall street people expect 
    Very good summary. My XS Max (ordered at Apple) arrived a couple of days ago, and judging by how long I had to wait for it, I don't think Apple is struggling with lacking demand.
    We hear the same old story every single year. If I could get 1 AAPL for every Apple doom and gloom insider info news cycle, I'd have a decent retirement portfolio by now. Meanwhile, the company is still alive and kicking, and their combination of market share and ASP makes them the untouchable #1 by such a ridiculous margin, that future generations will read about this phenomenon in their economy courses.
    So, yeah ... yawn.
    radarthekat
  • Reply 6 of 7
    maestro64maestro64 Posts: 4,343member
    It could be that Apple is now using different suppliers for the Xs modals and the iPad and these supplies are just now finding out they were replaced or second sourced for the parts they supply. I have worked with Apple supplies and they say all the time many times they are they last to know Apple made sourcing decision or change which affects them.
  • Reply 7 of 7
    ZRyser said:
    Please, speculate away for a couple more weeks. I'd like to unload some excess $ onto AAPL.
    If you guys could make it go around or below $180 per, that'd be really appreciated. Anyway, keep up the good work, media.
    They've done even better than $180.00 you wanted ... so around 12% down from when you made this post?
    And around 27% over a 2 month period ?
    That's $200 billion knocked off in 2 months because of the slow demand?


    edited December 8
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