APPLE SUPPLIERS’ STOCKS TUMBLE
Investors fret as technology firms slash forecasts for sales on reduce shipments
SHARES of major suppliers to Apple Inc’s iPhone fell yesterday as investors fretted that one of the most important product lines in the technology sector was seeing weak demand.
In Asia, Japan Display Inc slashed its forecasts for sales growth and operating margins, citing volatile customer demand.
JDI, which makes LCD screens used in the iPhone XR, plunged 11 per cent to its lowest since debuting in 2014.
Lumentum Holdings Inc plummeted a record 33 per cent after cutting its second-quarter outlook when one of its largest customers asked to “reduce shipments” for previously placed orders.
Lumentum, a maker of parts used for facial recognition, didn’t name the customer but Apple is its biggest, according to Bloomberg supply-chain data.
Apple fell five per cent. Oclaro Inc, which is being bought by Lumentum, lost 12 per cent, its biggest drop since April.
“Investors should consider Lumentum’s updated guide as reflecting as much as a 30 per cent cut in Apple orders,” said Wells Fargo analyst Aaron Rakers.
“Concerns of JDI’s survival are likely to persist,” wrote Jefferies analyst Atul Goyal.
“With uncertainty in demand for its major customer’s new models and more phone makers switching to new technologies, the sustainability risk to its fundamentals remains,” he added.
Lumentum executives told investors at a UBS Group AG conference in San Francisco that the customer asked to cut 3D component shipments just days ago after having requested expedited orders in recent weeks.
Among other Apple suppliers, South Korea’s LG Innotek Co, which gets half its revenue from Apple, slid 9.5 per cent.
Japan’s Minebea Mitsumi Inc slid 7.2 per cent and Alps Electric Co dipped 8.9 per cent. Taiwan’s Catcher Technology Co fell 5.1 per cent and Visual Photonics Epitaxy Co slumped 8.9 per cent.
In China, Lens Technology Co dropped 2.5 per cent.
United States chipmakers Cirrus Logic Inc sank 14 per cent, and Qorvo Inc and Broadcom Inc each slid 6.4 per cent.