Apple Suppliers Brace For Impact As Company Dominates High-End Mobile Market

Jan 4, 2019
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As we near Apple’s quarterly report, it’s no surprise that reports of the company’s ill-fortunes with the iPhone have once again started to make rounds. The current sentiment reminds us of last year when Apple was reported to face similar problems with the iPhone X. But as the balance sheet rolled out, everyone (including reputed publications) were forced to swallow their own words.

Now that we’re a handfull of weeks away from Apple’s first Quarterly reports post-holiday season, all eyes are once again on the iPhone. A fresh report from DigiTimes sheds more light on the matter. Take a look below for more details.

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Before we get into the details of today’s report, it’s very important to have some context surrounding it. Right now, it’s believed that the reason behind ‘reports’ of a slowdown in growth for both Samsung and Apple’s high-end mobile devices is simply the result of a slowdown in the market itself. However, a recent report by Counterpoint begs to differ.

According to this report, while the overall smartphone market has shrunk by 5%, the high-end segment (price > $400) has grown by 19%. Keep in mind that Apple only plays in this segment, and Counterpoint’s definition of such a gadget also includes older iPhones (for e.g., the iPhone 7 starts at $449).

Apple dominates this segment, and it also leads in the ultra-high-end (price > $800) sub-segment despite options such as Samsung’s Galaxy Note 9 being available. That’s a lot to say for a company which is facing ‘troubles’ in the market. However, Apple’s recent revenue revision didn’t serve well, and now DigiTimes provides us with how this change will affect the Cupertino tech giant’s Chinese supplier base.

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The report provides us with two important bits of information. First, it claims that Apple’s supplier base in China is bracing for impact following the company’s revised 1Q19 revenue estimates. According to DigiTimes’ sources, Apple’s suppliers are making preparations to deal with a slowdown in orders from the company. The reasons behind this slowdown make for the second important reveal in the report.

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The first reason is an alleged overestimate by Apple for shipments of the 2018 iPhone lineup. The company seems to have missed these, and as a result, it will cut down orders from suppliers. Of course, its troubles in China will contribute towards this as well. The second reason is an age-old Apple tradition. The company likes to wait out before testing new technologies; a tradition that has persisted since it launched the iPod.

Now, as Android manufacturers and their partners continue to drum up the hype for 5G, Apple will once again sit this one out in 2019. To compensate and compete with others, DigiTimes believes that Apple will price its products competitively; the end result of which will be dealt with by the suppliers, and hence constitute the second reason behind a slowdown.

Thoughts? Let us know what you think in the comments section below and stay tuned. We’ll keep you updated on the latest.

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