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 The forecasts of lackluster sales by companies including Taiwan
Semiconductor Manufacturing Co (TSMC), the world's biggest contract
chipmaker, and smartphone camera lens producer Largan Precision Co
Ltd add to concerns about Apple's outlook amid slowing global demand
for smartphones.
Industry executives say the latest iPhone did not have enough new
features from the previous model to tempt users, raising fears that
Apple's innovative streak - and the profits it has generated - may
be running its course.
Apple, which reports December-quarter results on Tuesday, declined
to comment on its sales outlook.
"Visibility is only a month at a time and demand is quite weak,"
Largan Precision Chief Executive Adam Lin told an earnings briefing,
referring to his company's overall business.
Other suppliers said Apple now only gave them orders one month in
advance, instead of the usual three months.
"We have to be very flexible in terms of capacity," said an
executive at one of those firms, declining to identify their company
or be named due to a confidentiality agreement that prevents Apple
suppliers from discussing its order book.
Apple has previously said that individual data from its supply chain
was not an accurate reflection of its outlook.
But TSMC, which makes some of the chips that go into iPhones,
forecast this month that first-quarter revenues would likely fall by
up to 11 percent year-on-year, adding that demand for high-end
smartphones would also be weak.
An 11 percent quarterly decline would be the steepest revenue drop
for TSMC in almost 7 years, Thomson Reuters data shows.
Earlier this month, people familiar with the matter told Reuters
that Taiwan-based Foxconn, which assembles most iPhones, had taken a
rare decision to cut working hours over a major holiday during which
workers usually rack up overtime.
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Foxconn, the trade name for Hon Hai Precision Industry Co Ltd, saw
its December revenues slump by a fifth and 2015 sales miss
expectations.
A more detailed picture about Apple's outlook could emerge next week
if key suppliers including LG Display Co Ltd, SK Hynix Inc and
Samsung Electronics Co provide first-quarter forecasts when they
report December-quarter earnings.
First-quarter revenues at both LG Display and Hynix are expected to
fall around 10 percent, according to Thomson Reuters I/B/E/S data.
Analysts say iPhone sales could pick up during the second half of
the year, when the company usually launches new products, but with
competitors such as Samsung Electronics and Huawei Technologies Co
Ltd [HWT.UL] sharpening their edge, some suppliers are not so sure.
"The pace of innovation has slowed. Apple is going toward the same
direction as other brand names," said another Taiwanese Apple
supplier.
(Additional reporting by Se Young Lee in SEOUL and Miyoung Kim and
Aradhana Aravindan in SINGAPORE; Editing by Miral Fahmy)
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