Rotten apple: Suppliers tumble amid weak iPhone demand
Suppliers tumble in markets Warning signs swirl around one of tech’s most important product lines, Apple’s iPhone.
Major suppliers to Apple Inc.’s iPhone fell Monday, as investors fretted that one of the most important product lines in the technology sector was seeing weak demand.
The latest warning sign was Lumentum Holdings Inc. cutting its second-quarter outlook after one of its largest customers asked to “meaningfully reduce shipments” for previously placed orders. Lumentum didn’t name the customer, but Apple is its biggest, according to Bloomberg supply-chain data. Shares of Lumentum plummeted 27 per cent in pre-mar- ket trading, while Apple dropped 2.6 per cent.
“We think investors should consider Lumentum’s updated guide as reflecting as much as a 30 per cent cut in Apple orders,” Wells Fargo analyst Aaron Rakers said in a note to clients.
Among other Apple suppliers, Qorvo Inc. dropped 5.6 per cent, Skyworks Solutions Inc. fell 3.8 per cent, Finisar Corp. dropped 4.3 per cent, Broadcom Inc. fell 3.8 per cent and Ciena Corp. lost 1.9 per cent.
Optical-component makers and semiconductor stocks were broadly lower.
Lumentum’s outlook comes a week after Nikkei reported that Apple was cancelling a production boost for its iPhone XR line, and less than two weeks after Apple’s fourth-quarter results showed tepid unit sales growth.
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.”
Adding to Monday’s negative news, Longbow Research cautioned Apple is facing weak iPhone demand in China.