The arrival of a new selection of iPhone devices is usually followed by news that they've all sold out, but this year, the story has been somewhat different. The iPhone XS, XS Plus and XR aren't posting the kind of numbers one normally associates with an Apple release, and that is having a knock-on effect on the suppliers who produce the parts for these handsets.
According to Elazar Capital analyst Chaim Siegel, who has been speaking to Reuters, on the topic, Apple's struggles are being felt elsewhere. “Many suppliers have lowered numbers because of their unnamed ‘largest customer,’ which is Apple," said Siegel.
Now, a new Bloomberg report reveals that Face ID component supplier AMS AG has scaled back its revenue estimates, blaming 'recent demand changes from a major consumer' as the main cause.
AMS's Q4 2018 estimates had been $610M, but it has changed this to around $480M. AMS isn't alone, either; primary iPhone assembler Hon Hai, screen supplier Japan Display and Lumentum Holdings – which shares Face ID production duties with AMS – have also confirmed they are lowering their revenue forecasts.
Given that all three iPhone models use Face ID this year, you'd expect companies like AMS and Lumentum to be posting bumper projections, but it would appear that Apple's latest phones are struggling to excite consumers and as a result, the company is scaling back production.
This issue is highlighted by the much-anticipated launch of the iPhone XR, which came a little after the arrival of the XS and XS Max and was tipped by many experts to be the best-selling iPhone of 2018. However, it took five days to sell out of its initial stock – in the past, the first wave is usually snapped up in hours. Apple has now said that it will no longer reveal sales figures for its phones, which speaks volumes.
The prestige of being a key Apple supplier is the dream of any company in the tech realm; in the past, it has been a lucrative job simply because of the volume that Apple expects to shift. Companies like AMS, Lumentum and Hon Hai are still going to comfortably make bank by being associated with the iPhone project, but the market rarely reacts kindly to news that projections are being cut rather than increased.
So why is Apple struggling to sell its phones? There are several possible reasons; they're incredibly expensive, for one. It's never been more expensive to own a top-line Apple device, and while the cheaper XR helps give a more reasonable entry-point, it's still as much as a Pixel 3, which is considered to be Google's 2018 flagship. Secondly, the XS and XS Max are mid-cycle designs, iterating on the groundbreaking iPhone X from last year. Perhaps fans don't consider them to be upgrade-worthy, and they are waiting for next year's model?
The apparent commercial failure of the XR is much harder to explain; the phone may be expensive for a 'budget' option but it has the same A12 processor as the XS and XS Max, comes in a wide range of eye-catching colours and offers better battery life. Surely this is the dream ticket for potential Apple consumers?
by dmcferran via Featured Articles
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