Apple shares drop over signs of iPhone slowdown
Apple's share price plummeted amid concern that the technology giant is cancelling production on its iPhones amid a sales slowdown.
Share prices dropped 5pc while major Apple suppliers also experience a slump on Monday.
One Apple supplier, Lumentum Holdings, trimmed its second quarter outlook on Monday and warned that one of its largest customers had asked to “materially reduce shipments” for previously placed orders.
The company creates laser components found in smartphones, and Apple is considered to be the business’ largest customer. Bloomberg reports that Wells Fargo analyst Aaron Rakers forecast a drop of as much as 30pc in Apple’s orders of Lumentum Holdings components.
Lumentum Holdings reduced its expected net revenue for the second quarter of 2019 from between $405m (£314m) and $430m to between $335m and $355m.
Shares in Lumentum dropped 28pc on the news. Oclaro, an optical components supplier which is being purchased by Lumentum Holdings, saw its shares drop by 10pc on Monday.
Other Apple suppliers were also affected. Shares in Cirrus Logic dropped 10pc and Qorvo stock slipped 7pc.
Bank of America Merrill Lynch analysts cautioned that an expected drop in component sales to Apple did not necessarily mean that Apple was reducing iPhone production, however. The analysts said the news “does not bode well” but said that it may be down to Apple already having built up a stockpile of the required components.
Last week, it was reported that Apple had cancelled a planned production increase for its new budget phone, the iPhone XR.
Nikkei reported that Apple had contacted its smartphone assembly contractors and informed them that it needed to increase production of the new device. However, the production push of iPhones has since been abandoned, Nikkei reported.
In a note to clients published on Monday, Longbow Research analysts warned of “sharp iPhone production cuts” which are likely to cause a drop in revenue for iPhone suppliers.
The analysts warned of production cuts of 12m new iPhones, particularly in the number of iPhone XS Max and iPhone XR phones being produced. “The iPhone story is showing cracks,” the analysts said.
