Supplier lowers outlook as Apple cuts its order
Lumentum Holdings, which supplies parts for Apple’s latest iPhones, said a large unnamed customer had cut orders, forcing it to lower its sales and profit forecasts less than two weeks after releasing the numbers.
Shares in the Californiabased manufacturer fell 27%, while those of Apple dropped 4%. Shares of several Apple suppliers were also hit.
Lumentum is one of the primary suppliers of technology that powers the Face ID feature of iPhones, with Apple accounting for 30% of the company’s revenue as of June 30.
“Many suppliers have lowered numbers because of their unnamed ‘largest customer’, which is Apple.
“Apple got cautious in its guidance and it’s hitting their suppliers, ” Elazar Capital analyst Chaim Siegel said.
Huawei Technologies and Ciena are Lumentum’s two other major customers, with each contributing 11% to its revenue.
Lumentum CEO Alan Lowe said one of the company’s largest customers for 3D sensing requested to reduce orders that were originally scheduled for delivery during the quarter.
Lumentum declined to give further details when contacted by Reuters.
Japan’s Nikkei reported earlier this month that Apple had told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to its new iPhone XR.
Another Apple supplier, screen maker Japan Display, on Monday also lowered its outlook for the full year, citing weaker demand from smartphone makers.
Apple warned earlier this month that sales for the crucial holiday quarter are likely to miss Wall Street expectations, which CEO Tim Cook blamed on weakness in emerging markets and foreign exchange costs.
Longbow Research analysts said spot checks with Apple’s Taiwanese suppliers late last week highlighted 20%-30% iPhone order cuts related mainly to iPhone XR and XS Max, and 20%-25% order increases for older iPhone models.
Apple started selling the iPhone XS and XS Max in September and the XR model in October. Lumentum’s chips are not used in phones older than last year’s iPhone X.