Apple Suppliers Tumble on New Signs of Weak iPhone Demand

Credit Getty Images  Apple

According to Lumentum's press release issued this morning they stated: "We recently received a request from one of our largest Industrial and Consumer customers for laser diodes for 3D sensing to materially reduce shipments to them during our fiscal second quarter for previously placed orders that were originally scheduled for delivery during the quarter", said Alan Lowe, President and CEO. Oclaro Inc., which is being bought by Lumentum, lost 12 percent, its biggest drop since April. Longbow Research has apparently conducted a check of Apple's iPhone supply chain and concludes that Apple is cutting its orders by 20% to 30% for the iPhone XS Max and iPhone XR.

"Concerns of JDI's survival are likely to persist", Jefferies analyst Atul Goyal wrote in a note to clients.

Loop Capital Markets also said the customer is likely Apple.

Apple didn't immediately respond to a request for comment on the reports. "Apple got cautious in their guidance and it's hitting their suppliers", he continued. Taiwan's Catcher Technology Co. fell 5.1 percent and Visual Photonics Epitaxy Co. slumped 8.9 percent.

US chipmakers Cirrus Logic Inc. sank 14 percent, and Qorvo Inc. and Broadcom Inc. each slid 6.4 percent. Semiconductor stocks were broadly lower with the Philadelphia Semiconductor Index losing 4.4 percent.

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 the iPhone XR, the cheapest of this year's new launches. Investors interpreted the news as cut in orders from Apple, which would jibe with the new iPhone 7 and 8 demand forecasts because those models don't use Face ID. And Citi downgraded Skyworks to neutral and slashed its price target to US$85 from US$116, citing both "disappointing iPhone XR unit sales" and "broad smartphone weakness".

JP Morgan analysts weighed in by cutting their price target for Apple by $4 to $270 pointing to poor orders for the new iPhone XR.

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