Apple suppliers take a hit after iPhone sales slump warning

05 January, 2019, 05:19 | Author: Kevin Carter
  • Mobile phones

Nationalistic sentiment was likely intensified by Apple apparently ignoring a Chinese court-ordered ban on iPhone sales in a case involving United States chipmaker Qualcomm, according to the analyst.

The move confirmed investors' biggest fear - a slowing global economy further hindered by the U.S. In late December, the promotional program for the new models went live in China, adding one major perk: users in China cannot only trade in their old iPhones, but also Android phones made by Apple's major competitors in China, including Huawei, OPPO and Xiaomi.

Cook claimed that the weakened demand came from China, but he noted that in "in some developed markets, iPhone upgrades also were not as strong as we thought they would be". Cook blamed the macroeconomy and U.S.

Apple CEO Tim Cook this week told investors that the main drag on the firm's performance in China had been a sharper-than-expected slowdown in the country's economy, exacerbated by the impact of trade tensions between Washington and Beijing.

Cook in November had cited slowing growth in emerging markets such as Brazil, India and Russian Federation when Apple gave first-quarter sales estimates that were lower than expected. "I think the pricing aspect plays a bigger role when the competitive pressures are intensifying in China".

Apple fell 8.3 percent following its announcement. Indeed, Nikkei Asian Review recently reported that many China-based companies are actively providing incentives to employees to buy devices from Chinese smartphone giant Huawei, following the arrest of Huawei's CFO in Canada at the behest of the United States - something that's surely going to add fuel to the proverbial fire.

A timeline illustrating Apple share prices in 2018. The current median price target is $186. Chipmakers and suppliers of phone parts also fell.

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Kevin Hassett, chairman of the White House council of economic advisers, said that U.S. companies selling in China would see their sales recover if the trade dispute is resolved.

"Futures immediately sold off. Apple is a 4 per cent position in the market and considered a bellwether and comments were that the US was fine, China was slower than expected".

Peter Richardson, a research director at Hong Kong-based Counterpoint Research, said it was hard to see a catalyst that would help Apple recover lost ground in China. Samsung, Apple's perennial rival in the premium portion of the smartphone market, is also said to be planning some fairly dramatic changes to its upcoming Galaxy S-series devices, too.

Apple said Wednesday that demand for iPhones on the market is declining and its revenue guidance for its fiscal 2019 first quarter, which ended on December 29, 2018, was revised downward.

Apple shares plummeted almost 10 percent on the news Thursday, with the company shedding some 38 percent since its valuation hit $1 trillion previous year.

That spells trouble for companies that rely on China's enormous market to boost their global sales.

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