Fewer orders at Apple suppliers could signal first iPhone sales decline

Taipei, January 22

Some of Apple Inc’s main Asian suppliers expect revenues and orders to drop this quarter, indicating iPhone sales are almost certain to post their first annual decline since the flagship product was launched almost a decade ago.

The forecasts of lacklustre 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.

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 per cent, adding that demand for high-end smartphones would also be weak.

An 11 per cent quarterly decline would be the steepest revenue drop for TSMC in almost seven 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.