Reports Say Apple's iPhone Is Headed For First Ever Year On Year Sales Decline
Evidence is growing that Apple may be nearing the end of the line when it comes to sales growth for its iPhone lineup. More component manufacturers in Apple's supply chain have reported downturns in Apple orders as well as smaller order time windows from the company.
The expected lack of growth in year-to-year sales of the handsets would mark the first time since the iPhone was introduced almost 10 years ago that the company wouldn't post year-on-year sales gains for the device. The writing appeared to be on the wall recently, when Foxconn (Hon Hai Precision Industry Co Ltd.), Apple's main Chinese manufacturer for its handsets, reduced worker overtime commitments during a major holiday in the region. Several analysts at the time forecasted slower sales, and now new information is emerging to support those projections.
Some of Apple's major component suppliers have stated that Apple is now only placing orders a month at a time as opposed to the three-month window they are accustomed to. Earlier this month, Taiwan Semiconductor Manufacturing Co Ltd. (TSMC), one of the iPhone's biggest chip suppliers, forecast a decline in revenues amounting to around 11 percent. That would result in the steepest sales decline for the company in seven years.
Another company, Largan Precision Co Ltd, which manufactures camera lenses for Apple smartphones, has also predicted weak sales for the period. Largan Precision Chief Executive Adam Lin stated in a recent earnings briefing that "Visibility is only a month at a time and demand is quite weak." While he did not specifically single out Apple as a contributor to the weakness, it appears likely, given that Cupertino accounts for a huge slice of overall production.
Other important suppliers, including Samsung, LG Display Co Ltd and SK Hynix Inc., could provide some details along with their upcoming earnings reports that may provide a clearer picture of Apple's current demand situation. The latter two suppliers are both expected to report a decline in earnings of approximately 10 percent.
While overall smartphone demand appears to have plateaued worldwide, some observers are also blaming the lack of significant new features in Apple's iPhone 6s and 6s Plus as one reason for slowing interest. This puts even more pressure on the company to develop the latest and greatest technology innovations for its upcoming iPhone 7 devices.