Fri, Nov 16, 2018 page10

• Apple supplier AMS cuts revenue forecast

  ONE OF FOUR: Qorvo, Lumentum and Japan Display — other firms in Apple’s supply chain — also blamed their reductions on demand changes from a major customer

  • Bloomberg
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  The bad news kept piling up for Apple Inc ahead of the crucial holiday season after AMS AG, an Austria-based maker of light sensors for smartphones, became at least the fourth key supplier to the US company this week to reduce revenue estimates for the current quarter.

  The spate of warnings, coupled with underwhelming earnings from main iPhone assembler Hon Hai Precision Industry Co (鴻海精密), underscore concerns about weak demand for Apple’s bread-and-butter device.

  Shares of AMS had fallen as much as 10 percent during pre-market trading in Switzerland yesterday.

  Apple is headed for its longest losing streak in more than six months as investors reassess the company’s growth prospects.

  Faced with a maturing smartphone market, its strategy has been to entice customers to pay more for phones with new features such as facial recognition, while sales of services from video to music are growing at a rapid clip.

  However, the company still relies on the iPhone for the bulk of its revenue, and the jury is still out on whether its latest line-up is a bona fide hit.

  The accumulation of warning signs has prompted revisions by analysts in the past week.

  Guggenheim on Wednesday said that Apple’s recent reliance on rising average selling prices was “no longer enough” to boost growth at a time unit sales show signs of slowing.

  Shares in Japan Display Inc, one of the quartet that reduced its sales outlook, slid 9.5 percent yesterday.

  The “iPhone’s nearly 60 percent contribution to revenue and profits looking like a headwind again,” Guggenheim wrote in a research note on Wednesday.

  Apple’s decision to stop disclosing unit sales for its main gadgets, including the iPhone, iPad and Macbook, has fueled concerns surrounding the outlook for component makers that depend on volume growth.

  AMS, whose largest customer is Apple, on Wednesday said it was cutting projections for fourth-quarter sales to US$480 million to US$520 million, from US$570 million to US$610 million last month.

  AMS blamed the reduction on “recent demand changes from a major consumer customer,” a similar explanation to those offered by Qorvo Inc, Lumentum Holdings Inc and Japan Display when they, too, reduced their outlooks.

  Cupertino, California-based Apple likes to diversify its suppliers, but four major component makers reducing revenue forecasts in the same week could mean that the company is bracing for lower-than-expected sales of its latest devices.

  None of the companies specifically cited Apple, but the iPhone maker is the largest customer and biggest revenue driver for all four, according to data compiled by Bloomberg.

  Qorvo gets 36 percent of revenue from Apple, Lumentum generates 30 percent, AMS receives more than 20 percent and Japan Display gets 55 percent, the data show.

  AMS makes what is known as an ambient light sensor, which helps measure how far a phone is from a user, for the Face ID facial recognition system on Apple’s iPhones. Qorvo makes wireless chips, while Lumentum makes 3D laser sensors for Face ID. Japan Display makes smartphone screens.
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