Apple Suppliers Cutting Sales Forecasts Due to ‘Extraordinary’ Decline in Chinese Demand

Nikkei reports major Apple supply partners based in Asia have been cutting their sales forecasts for 2019, citing an “extraordinary” drop in Chinese demand.

Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker and sole supplier of iPhone core processor chips, and Japan’s Nidec, sole supplier of the motor that makes iPhones vibrate when receiving calls or texts, are the latest to deliver downbeat assessments for 2019. TSMC expects a 22% drop in revenue for January to March, while Nidec has cut its full-year profit outlook by more than 25%.

Nidec supplies the vibration motor used in the iPhone.

“We have faced extraordinary changes,” Nidec Chairman Shigenobu Nagamori told reporters at a Thursday news conference as the company reversed a previous forecast of a record profit. The headwinds for business in China turned out to be stronger than expected, with demand for automotive and home appliance motors also tumbling there.

Apple’s partners aren’t the only ones forecasting a drop in revenue, as Apple has lowered its own guidance for the holiday quarter, down to $84 million, a considerable reduction from earlier estimates of $89 to $93 million.

Apple has reportedly asked its suppliers to cut production of the iPhone XR, XS, and XS Max by 10% for the next three months, and is cutting back on hiring in many of its own divisions due to the sales slump.