As three key Apple suppliers have slashed their revenue forecast amidst slowing iPhone sales, the Cupertino company’s shares have fallen to their lowest in three months. The suppliers include Lumentum Holdings which supplies Apple with key hardware for Face ID along with Japan Display and IQE.
Lumentum Holdings reduced its forecast revenue for Q4 by $70 million. This led Apple’s shares to drop by 5 percent.
Lumentum blamed the cut in numbers it gave originally just 12 days ago on a client that was “one of our largest… for laser diodes for 3D sensing”, which analysts said could only be Apple.
Based on Lumentum forecast, analysts have deduced that there is an 18 to 20 million reduction in iPhone orders from Apple. Analyst Mark Kelleher believes that Apple might have had too much Lumentum inventory which it needs to clear off. While this explains the reduction in order, there’s no denying the slowdown in iPhone sales.
“Apple could have accumulated too much Lumentum inventory, and needs to work it off, in which case the unit shortfall is less, although it is still indicative of weak iPhone sales.” D.A. Davidson analyst Mark Kelleher said.
For its part, Apple has repeatedly told that one should not give too much value to its supply chain orders. A similar story played out last year with the iPhone X which was actually expected to do exceedingly well. However, a couple of months after the iPhone X launch, there were reports of Apple cutting down on its production which led to the company’s shares and that of its suppliers crashing. This led analysts to claim that the iPhone X was a failure as it had not done as per market expectations. And yet, the iPhone X remained the best selling smartphone across the globe since its launch despite its hefty $999 price tag.
With the smartphone upgrade cycle increasing and iPhones getting more expensive, it was a matter of time before iPhone sales slowed down. Apple seems to be making up for the slowdown in sales by increasing the ASP (Average Selling Price) of its iPhones thereby ensuring that its high profitability is not affected by any means.