Today’s sober headline on Wall Street was echoed by a published business network CNBC report indicating that high-tech darling Apple had lost $64 Billion in stock value this week over concerns for future iPhone demand.

What makes this development of interest to our reading audience is that the information sources cited in these reports come from financial disclosures emanating from Apple’s iPhone product supply chain.

The report notes that the decline was sparked by global semiconductor chip provider TSMC’s weaker than expected financial guidance for the coming quarter. TSMC’s revenue forecast declined by nearly a $1 billion and was attributed to “weak demand” in the mobile sector. Austria based optical sensor supplier AMS forecasted its Q2 revenues to be half of previous estimates, indicating that the supplier was experiencing lower business from a large unnamed smartphones program. Equity analysts had charted AMS to be a direct supplier to the iPhone X.

The CNBC report further cites an equity analyst as indicating that heading into Apple’s fiscal Q2 quarter, the Street is in “full panic mode” as Asia based supply chain checks indicate iPhone shipments are trending downward. That is not new news in that since mid-December, Asia based high tech outlets continued to cite confidential supplier-based sources as indicating that Apple’s production planning had continually reduced volume requests from suppliers. Other web sources have indicated that Apple’s design teams are in the process of modifying the product line-up for the upcoming Fall new product announcements and production ramp-up cycles. Price points may well be a factor in sustaining future iPhone product volumes and that naturally has investors concerned.

The often-cited academic studies that correlate supply chain glitches or bad news concerning the supply chain with meaningful drops in a company’s stock price continues to have meaning. In this week’s specific example, Apple’s stock, has fallen 7.1 percent within three trading sessions and the evidence of concern reflects observations up and down the iPhone supply chain.

Apple will no doubt, adjust its iPhone product design and marketing strategies. As we have pointed out in many prior commentaries, with so many suppliers pinning their financial and business success strategies to Apple’s global reach and significant volumes, it should be little surprise that Apple watchers know exactly where to look for signs of the future.

 

Bob Ferrari

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