The Cupertino, California-based tech giant's shares fell to their lowest in more than three months on Monday after three suppliers cut their forecasts for iPhone sales in the coming holiday season. Lumentum didn't name the customer, but Apple is its biggest, according to Bloomberg supply-chain data.
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%.
Screen maker Japan Display Inc (6740.T) cited lower smartphone demand in cutting its own outlook, while British chipmaker IQE Plc (IQE.L) said lower orders from a major customer would reduce its results for this year. Shares of Lumentum plummeted a record 30 per cent while Apple dropped as much as 4.1 per cent. Oclaro Inc., which is being bought by Lumentum, lost 11 per cent, on track for its biggest drop since April.
The securities and banking house says that it too expects Apple to cut back on iPhone orders, but also mentions that the company is having issues expanding its profit margins.
Among other Apple suppliers, Cirrus Logic Inc. dropped 10 per cent at 9:49 a.m.in NY. In its most-recent quarter, Apple reported nearly no increase in the number of iPhones sold, but revenue from that business jumped 29 percent from a year earlier.
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Widely respected analyst Ming-Chi Kuo writes that sales of Apple's new iPhone XR are slightly below expectations, corroborating a handful of previous reports we've seen over the past few days.
Lumentum makes the vertical cavity surface-emitting lasers, or VCSELs, that Apple uses for its latest iPhones that come with 3-D facial recognition.
Kuo's forecast follows a report last week that described two of the company's largest suppliers, Foxconn and Pegatron, being told to halt plans for additional iPhone XR production lines. Analysts said that this could only refer to Apple.
"Although Apple has positioned itself as a super-expensive handset maker providing high-end products, its strategy has not been working in emerging markets including China and India as Chinese vendors have been making iPhone-like products", he said.
Early in the year, the company confirmed it had been intentionally throttling the speeds of some older phones to avoid battery-related problems.