Skip to Content

iPhone Suppliers Send Apple’s Stock Down

Most are expecting Apple to announce a drop in sales for the first time in 13 years during its second quarter earnings report in two weeks.

But before the report could drop, two pieces of bad (though related) news flew out on Friday, (AAPL), taking shares of the stock down 2% in midday trading.

First, two companies that supply Apple with iPhone parts, Taiwan Semiconductor Manufacturing and Largan Precision, warned investors that revenue in the quarter would be weaker than expected. TSM in particular noted in their earnings that demand for expensive phones, those above $500 had waned, while demand for cheaper phones below $400 had risen.

The retail price of an iPhone 6 is $749 for 16 GB. The iPhone SE is $399 at its cheapest model.

A report from the Nikkei Asian Review, a Japanese publication, later in the day confirmed what many suspected: Demand for iPhones was winding down.

 

Apple told suppliers to expect iPhone output to stay at its current, reduced level for another three months, the Nikkei reported, citing unnamed sources who work with the suppliers. The sources said that for Apple had lowered production by 30% for the second quarter as compared to the same period a year earlier.

That was driven by slow sales of the company’s iPhone 6s and iPhone 6s Plus.

Though expectations about Apple’s sales have been muted on Wall Street, there may still be a reason to feel hopeful about the stock.

The iPhone 7, according to Goldman Sachs analysts.

In an April 12 research note, Goldman analysts noted: “Our survey points to extremely strong pent-up demand for the iPhone 7, with 44% of respondents indicating that that they plan to buy the iPhone 7 in the fall.”