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Apple has a Plan B as iPhone demand peaks; Many suppliers don't

14 November, 2018, 05:38 | Author: Kristi Dunn
  • More Evidence Emerges of Soft iPhone Sales

Apple began shipping the iPhone XR on October 26 after two weeks of pre-orders. With shares of the Cupertino, Calif. -based tech titan down almost 18% from all-time highs reached in October, some see the recent weakness as a buy opportunity, while others are warning of more pain ahead for the high-flying FAANG player.

In a report Monday, Kuo also forecast a year-over-year decline in overall iPhone shipments for the beginning of 2019.

Kuo now expects Apple to ship 70 million iPhone XR units during the holiday quarter, down from his original forecast of 100 million units. "Apple got cautious in their guidance and it's hitting their suppliers", Elazar Capital analyst Chaim Siegel said.

Apple's iPhone XR, which boasts the iPhone X's edge-to-edge display, is based on older LCD pixels instead of the X's high-resolution OLED screen.

Apple has lost $120 billion in market capitalisation since the last trading day of September, and many analysts are warning that the brief days of Apple being a trillion dollar company are over. And on Monday, Apple shares dropped after Lumentum - a supplier of "laser diodes for 3D sensing", such as those used by Apple's Face ID - cut its revenue forecast after "one of our largest Industrial and Consumer customers" significantly reduced orders.

Apple accounted for half of Lumentum's revenue in its December quarter in 2017, while the iPhone is expected to represent 50 percent of Japan Display's revenue this year, according to the Wall Street Journal.

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The report builds speculation around the success of Apple's latest iPhones with Foxconn the Company that assembles the devices cut back production lines from six to two.

These data points come as fears emerge that there is weak demand for Apple's products in emerging markets, including China, partly driven by a strong dollar making iPhones more expensive. "Also, the chances of further tax reform are close to zero, so I don't expect any more material reductions in Apple's reported tax rate", said Forbes' Jim Collins.

Analysts interpreted the move as an indicator that Apple may have 'something to hide'.

"Some people may fear that this now means that the iPhone units are going to start going negative year over year because it's easier to talk about great things and not show the details of things that aren't so great", Citi analyst Jim Suva said during the conference call.

The stock was up 4 percent on Tuesday.

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