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Apple Suppliers: Why Their Stocks Fell on December 6

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Largan Precision expects lower revenue for December 2017

The stock of Apple (AAPL) iPhone lens manufacturer Largan Precision fell 10% on Wednesday, December 6, 2017, after it announced that revenue for December 2017 is expected to decline. Historically, the month of December has been strong in terms of iPhone shipments.

Largan has attributed the expected fall in revenue to fewer customer orders. In November 2017, Largan reported revenues of $187.2 million, a rise of 8% YoY (year-over-year) and flat month-over-month. The company manufactures camera lenses for all iPhone models.

According to a report from Nikkei Asian Review, Yuanta Securities Investment Consulting analyst Jeff Pu stated, “It’s really below the market expectation and tells a lot about weakening iPhone X demand. There is no supercycle for the premium model after all.” He added, “Component-wise, we learned from the supply chain check at the end of November that Apple has notified suppliers to cut orders [by] some 11-12% for parts that go into the iPhone X.”

Apple expected to ship 63 million–69 million iPhone Xs

Pu has estimated that Apple will ship 63 million–69 million iPhone Xs through March 2018. The iPhone X has been available for purchase since early November. Pu added that Apple might cut orders in January 2018 as well.

Yuanta Securities Investment said previously that Apple cut orders for the iPhone 8 and iPhone 8 Plus in 1Q18 to 16 million units, which was 50% less than 4Q17. In the above chart, we can see that 78.3 million iPhones were shipped in 4Q16, compared to 74.8 million in 4Q15.

The stocks of other Apple suppliers also fell. Skyworks Solutions (SWKS), Qorvo (QRVO), and Cirrus Logic (CRUS) fell 1.2%, 2.3%, and 1.4%, respectively, on December 6, 2017.

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