Apple’s decline in iPhone sales is unsurprisingly having a knock-on effect on its key suppliers, with the WSJ reporting that Foxconn, Pegatron, Sharp, Japan Display and Sony have all reported falling profits or losses as a result.
Suppliers say they expect to see a boost in demand from the new iPhone later this year, but analysts have predicted that Apple’s smartphone business may not return to growth this year, and suppliers don’t see an immediate replacement for the reduced business.
“We are all closely watching new areas, like the Internet of Things and automotive electronics,” said Charles Lin, chief financial officer of Pegatron, a secondary iPhone assembler for Apple based in Taiwan. “But so far there is nothing nearly approaching the scale of smartphones.”
Foxconn’s first-quarter profits fell 9.2%, with Pegatron seeing a much larger reduction of 35.1%. Sharp’s display business reported a loss, Japan Display’s existing losses increased, and Sony said that it had over-estimated demand for the camera sensors used in the iPhone.
KGI analyst Ming-Chi Kuo said recently that the iPhone 7 may not be sufficiently appealing to return the iPhone to growth. Tim Cook presented a rosier picture in a CNBC interview, and I gave my own take on the issue in a subsequent opinion piece.