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"Spectacular Miss" By Key Apple Supplier Paints Ominous Picture For iPhone Demand
04-24-2018, 08:40 AM,
"Spectacular Miss" By Key Apple Supplier Paints Ominous Picture For iPhone Demand
"Spectacular Miss" By Key Apple Supplier Paints Ominous Picture For iPhone Demand

<p>Another day, another flashing red warning that sales of the iPhone X are far worse than Tim Cook had ever expected; this time courtesy of Austrian chipmaker AMS AG - which makes the optical sensors that control brightness and color  - which just days after a similar warning from semiconductor giant Taiwan Semi, became the latest Apple-supplier to cast doubt over the iPhone's chilled reception.</p>

<p>AMS shares plunged as much as 14%, the most this year, after warning on negative operating margins because of low production capacity at its Singapore factories, and after its guidance for sequential revenue drop in 2Q <strong>missed the lowest estimate among analysts in a Bloomberg survey, </strong>adding to the recent negative datapoints in the iPhone X supply chain.</p>

<p><a data-image-external-href="" data-image-href="/sites/default/files/inline-images/ams%20ag.jpg?itok=vtMQaOBf" data-link-option="0" href=""><img data-entity-type="file" data-entity-uuid="7652406a-5a37-4702-9ce4-b0b8470543cd" data-responsive-image-style="inline_images" height="220" width="500" srcset=" 1x" src="" alt="" typeof="foaf:Image" /></a></p>

<p>Mirabaud analyst Neil Campling <strong>said AMS’ "spectacular miss on guidance" was so bad, "it’s surprising the company didn’t preannounce.</strong>" Campling also said that major product changes and product transitions blamed are “all Apple, specifically iPhone X" and added that "<strong>phasing down iPhone X has taken the supply chain by surprise."</strong></p>

<p>With regard to AMS, he said that even as 3D sensing is a complex technology, AMS is another semiconductor company to have re-rated higher, valuation needs to reset. And while other analysts noted AMS’ expertise in complex 3D sensing technology should provide some long-term cover, the lack of short-term visibility will keep shares under pressure in the near term.</p>

<p>Following the AMS reports, European chipmakers including Dialog Semi, STMicro and IQE all fell, with industry concerns further fueled by a disappointing report from South Korea’s SK Hynix. Following last week's surprise guidance miss, today the bulk of Apple's supply chain was lower, with Dialog Semi -5.9%, STMicro -4%, ASML -2.1%, and Infineon -1.6%.</p>

<p>Following the report, Apple'<strong>s five largest device assemblers have all reported a sharp slowdown after peaking at the end of last year, suggesting demand for the high-end device may have faded just a quarter after its release</strong>. As Bloomberg notes, while Hai Precision Industry Co., Pegatron Corp. and three other key suppliers reported an 8 percent rise in their total sales across the March quarter, growth cratered later in the period - a drop that in the past has presaged a downturn for Apple, hardly what AAPL longs want to hear one week ahead of earnings, which are expected on May 1.</p>

<p>As Bloomberg also notes, the concern is that the iPhone X, while enjoying a customary holiday quarter spike for new-generation Apple gadgets, <strong>"fizzled out rapidly."</strong></p>

<p>Apple’s costliest smartphone has struggled to draw customers in emerging markets, while competitors from Huawei to Xiaomi roll out more premium phones and dominate China -- the U.S. company’s biggest foreign market. On Friday, Morgan Stanley cut its estimate on iPhone shipments by 6 million, underscoringthe growing unease since Taiwan Semiconductor Manufacturing Co., the maker of iPhone processors, issued a disappointing outlook that triggered a 7 percent loss in Apple’s value over the past three days.</p>

<p>As AAPL's recent stock troubles confirm, investors remain concerned that iPhone failed to meet their lofty expectations. Mia Huang, an analyst at Taipei-based research firm Trendforce, <strong>estimates that overall iPhone production volumes grew slightly to 54-56 million units in the March quarter - barely up from 52 million in the same period of last year, when it was propelled by demand for lower-priced and older models like the iPhone 6S and ramp up of the iPhone 7</strong>.</p>

<p>“According to our estimates, iPhone X’s production volume fell by 50% in the first quarter compared to the fourth quarter,” said Huang.</p>

<p>Hardly a ringing endorsement for the world's most valuable company...</p><img src="" height="1" width="1" alt=""/>

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