Apple stock dipped more than 2.5 percent on Thursday after a report indicated the company’s iPhone suppliers are expecting a rough second half of the year.
According to the Nikkei Asian Review, tech suppliers in Taiwan have said they’re expecting a significant decrease in the number of orders received in the second portion of 2016.
A source from Apple’s only supplier of A10 chips for the iPhone reportedly told Nikkei chip shipments in the June to December period are expected to be only 70 percent to 80 percent of last year’s total.
Nikkei’s sources blamed the predicted drop not only on the contracting smartphone market, but also a lack of innovation in Apple’s forthcoming iPhone 7.
But the news doesn’t come as much of a surprise.
In the first quarter, Apple reported its first ever year-over-year drop in both iPhone sales and quarterly revenue as global smartphone shipments across the board also shrank for the first time since 1996.
Analysts have said Apple’s release of the iPhone SE in late March is expected to provide a second quarter boost, but won’t provide much help for the company’s full year shipment figures. And Apple knows it.
“iPhone SE is going to face severe price competition from Chinese branded products in its target market, which is the mid-range device segment,” TrendForce smartphone analyst Avril Wu said. “This year’s iPhone SE shipments are projected to come in below 15 million units and they are unlikely to help turn around the weak annual shipment result for Apple.”
In the middle of April, reports surfaced that Apple was planning to extend production cuts of nearly 30 percent instituted in the January to March period through at least the second quarter.
Apple’s anticipated decline has sent the company’s stocks plummeting. Shares in the tech giant are down 14.3 percent year to date and 28.4 percent over the past 12 months.
