Key Apple Supplier From Japan Sees Demand Correction, Fears Migrating Production To China Over Security Concerns
Murata Manufacturing Inc (OTC: MRAAF) (OTC: MRAAY) expects Apple Inc (NASDAQ: AAPL) to curtail iPhone 14 production further in the coming months because of weak demand.
"Judging by handset availability in stores, I see a downward revision happening," Murata President Norio Nakajima said in a Bloomberg interview. "I hope that it won't be too deep."
Nakajima's comments reflect slowing consumer spending due to rising interest rates, elevated inflation, and sputtering economic growth.
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Apple has pruned iPhone output as demand weakened and may slash production further.
Supply-side problems did not bother Murata as it could recoup production in January and February, said Nakajima. Demand-side weakness is a concern, he said.
Nakajima said Chinese handset makers' incoming models lacked enticing new features.
He expected the phone market to start recovering "at a gradual pace" in the fiscal year beginning in April.
Nakajima ran a long-term project to build a production chain for Murata that operated entirely in China, using local parts.
Murata makes 65% of its products in Japan.
Nakajima expressed bullishness over China's prowess in semiconductor technology. However, he was wary about migrating production to China, including high-frequency devices and communication modules, due to his concerns over confidential information security.
Price Action: AAPL shares traded lower by 1.51% at $140.75 premarket on the last check Friday
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