Apple shares drop on iPhone suppliers' warnings, Companies & Markets News & Top Stories

Darnell Taylor
November 13, 2018

Lumentum, which builds laser sensors for the iPhone XR's Face ID system, slashed its financial outlook Monday, raising fresh alarm bells for the success of Apple's latest generation of smartphones across the board.

Following a poor forecast earlier this month, analysts and investors voiced concern over the state of Apple's business, contributing to growing worries that iPhone sales were stagnating and could hurt suppliers.

"Apple's iPhone weakness has been a long-term issue for the Asia supply chain", said Arthur Liao, an analyst at Fubon Research in Taipei. Rival Pegatron Corp fell more than 5 percent but later recouped losses. Semiconductor stocks were broadly lower with the Philadelphia Semiconductor Index losing 4.4 percent.

Shares of the tech giant slid as much as 5 percent Monday on a profit warning from a parts supplier for the company's new iPhone XR - a new, lower-priced model that has been positioned to drive big sales.

Other Apple suppliers were also affected.

Analysts said the lack of technological breakthroughs had put a cap on demand, which would persist in the coming quarters. Japan Display Inc., which gets more than half its revenue from the iPhone maker, cut forecasts.

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Analyst Ming-Chi Kuo has been keeping his finger on the pulse of Apple component suppliers and that pulse is slowing – the total expected shipments of the iPhone XR have been revised down by as much as 30%.

The Nikkei report came days after Apple warned in its quarterly earnings report that sales for the crucial holiday quarter would likely miss Wall Street expectations.

Among other Apple suppliers in the region, Hong Kong-based acoustic components maker AAC Technologies Holdings Inc fell more than 6 percent.

Speculation from news organizations like Reuters are reporting that the company to which Lumentum is referring to is Apple. The company also said it would stop providing unit sales for iPhones, iPads, and Macs in fiscal 2019, a step Nomura Instinet said raised "the spectre of a sustained iPhone downturn".

"(This) indicates that the company itself is not confident about its performance at the moment", said Park Jung-hoon, a fund manager at HDC Asset Management, which owns Samsung Electronics shares.

While it isn't unusual to hear that Apple is cutting orders for its latest handsets from time to time, investors believe a real crisis is at hand.

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