Suppliers hurt by report of lower iPhone production

'INVENTORY PILE-UP': US giant Apple is expected to scale back production of its latest iPhone models by about 30 per cent in the first quarter.


    Jan 07, 2016

    Suppliers hurt by report of lower iPhone production


    APPLE is expected to cut production of its latest iPhone models by about 30 per cent in the January-March quarter due to mounting inventories, the Nikkei reported, rattling the nerves of investors in the United States giant's Asian suppliers.

    As inventories of the iPhone 6s and 6s Plus have piled up since they were launched last September, production will be scaled back to let dealers go through their current stock, the business daily reported.

    The report prompted a 2.5 per cent price drop in Apple shares, which have lost about a quarter of their value from record highs in April.

    Shares in the mainly Asian makers of the iPhones' screens and chips were also sharply lower yesterday.

    Among LCD panel makers, Japan Display fell 4.7 per cent while LG Display dropped 3.4 per cent.

    Hon Hai Precision Industry was down 1.8 per cent.

    It is a major assembler of Apple's iPhones.

    Production is expected to return to normal in the April-June quarter, the Nikkei reported.

    However, Patrick Moorhead, an analyst at Moor Insights & Strategy, said he was a bit sceptical about the production-cut reports.

    "Apple has been gaining significant market share in pretty much every region, and I'm not seeing a global slowdown," he added.

    Apple was not immediately available for comment.

    The parts suppliers cited in the Nikkei report were not available for comment outside their regular business hours.

    Tepid forecast by Apple suppliers, such as Jabil Circuit, which manufactures casings for iPhones, and Dialog Semiconductor GmbH, stoked fears last month that iPhone shipments could fall for the first time.

    Wall Street has also tempered its view on the high-flying stock in recent months.

    Since early last month, about a third of the analysts tracked by Thomson Reuters have trimmed their estimates on Apple.

    For fiscal 2016, Apple is expected, on average, to grow revenue by under 4 per cent, a far cry from the 28 per cent revenue growth it achieved in the fiscal year that ended in September.