IPhone Delay Interrupts That Supply Chain Rhythm, , on October 6, 2020 at 2:42 am

By
On October 6, 2020
Tags:

(Bloomberg Opinion) — For the first time since 2011, Apple Inc. didn’t release a version of its flagship iPhone in September. That delay has had a massive ripple effect through its network of vendors, which makes parsing supply-chain data even more challenging than usual.Since at least March, we knew that the next installment of the iconic device would be pushed back due to Covid-19. The pandemic initially hit manufacturing lines in China, but continued to impact the rest of the global lineup of companies that contribute to the product, all the way back to the team that develops it in Cupertino.Foxconn Technology Group is the most obvious example. Its Hon Hai Precision Industry Co. unit, which assembles iPhones at factories chiefly in China, posted a 21% drop in September sales Monday. It’s not alone. Largan Precision Co., which makes camera lenses for smartphones, reported a decrease of 22%. The declines resulted in a 7% fall in third-quarter revenue at Hon Hai, the largest for that period in over a decade. Largan had it worse, plummeting 20% for the quarter. Taiwan Semiconductor Manufacturing Co., the major provider of chips for gadgets, is expected to post 11% quarterly growth when it reports sales Thursday. That’s respectable, but slower than recent quarters and could be further hurt by a a strengthening Taiwan dollar.What makes the conundrum more revealing, and at the same time confusing, are the different tales being told at these companies. Largan’s woes, for example, aren’t limited to the iPhone delay. The September decline wasn’t a one-time event, and actually followed double-digit drops in the previous two months, partly reflecting developments at Huawei Technologies Co. and Xiaomi Corp.“Weakening demand for premium smartphone lenses and order cuts from Huawei are the two major factors weighing on product prices and lens shipments,” Bloomberg Intelligence analyst Charles Shum wrote this week of Largan. “Huawei, Xiaomi and other smartphone makers are expected to focus on selling more mid- and low-end models to maintain sales volume during the pandemic crisis.”The takeaway here is that consumers may not be rejecting the latest iPhone itself, but simply saving their money and opting not to buy any new top-end smartphone amid the global economic uncertainty. Alternatively, the work-from-home trend and lack of other places to spend money (autumn in Paris, anyone?) could spur people to upgrade.With the iPhone to be revealed next week, and the sales launch likely to be absent the ritual queues outside Apple retail stores, we won’t know how well it’s doing until press releases (to be glowing, of course) and news reports (fawning, perhaps) roll in during subsequent weeks. Market researchers may be able to give us hints by late October.One of the comforting aspects of a September iPhone release was how it allowed revenue at suppliers to be broken into two distinct phases: ramp-up, reveal, and release in the third quarter; followed by momentum and holiday-season demand in the fourth. This year, it will be crammed into just one period. The first weeks of November and December will be critical for the analysts, traders and investors who parse supply-chain data to get a handle on the world’s biggest tech company. Well before firms report quarterly revenue, Taiwanese companies are required to announce monthly sales. If October numbers, to be reported by Nov. 10, don’t show massive spikes, then expect an overreaction in tech stocks. Some bulls will hold on for November data, out in early December, to prove themselves right. Many will wonder whether such data shows true strength, or is merely catch-up demand from a delayed release. But we won’t get a fuller picture until early January, after the quarter is closed.This all means that not only must consumers wait longer to get their hands on the shiny new toy, but supply chain watchers will be left on tenterhooks longer than usual.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.,

IPhone Delay Interrupts That Supply Chain Rhythm(Bloomberg Opinion) — For the first time since 2011, Apple Inc. didn’t release a version of its flagship iPhone in September. That delay has had a massive ripple effect through its network of vendors, which makes parsing supply-chain data even more challenging than usual.Since at least March, we knew that the next installment of the iconic device would be pushed back due to Covid-19. The pandemic initially hit manufacturing lines in China, but continued to impact the rest of the global lineup of companies that contribute to the product, all the way back to the team that develops it in Cupertino.Foxconn Technology Group is the most obvious example. Its Hon Hai Precision Industry Co. unit, which assembles iPhones at factories chiefly in China, posted a 21% drop in September sales Monday. It’s not alone. Largan Precision Co., which makes camera lenses for smartphones, reported a decrease of 22%. The declines resulted in a 7% fall in third-quarter revenue at Hon Hai, the largest for that period in over a decade. Largan had it worse, plummeting 20% for the quarter. Taiwan Semiconductor Manufacturing Co., the major provider of chips for gadgets, is expected to post 11% quarterly growth when it reports sales Thursday. That’s respectable, but slower than recent quarters and could be further hurt by a a strengthening Taiwan dollar.What makes the conundrum more revealing, and at the same time confusing, are the different tales being told at these companies. Largan’s woes, for example, aren’t limited to the iPhone delay. The September decline wasn’t a one-time event, and actually followed double-digit drops in the previous two months, partly reflecting developments at Huawei Technologies Co. and Xiaomi Corp.“Weakening demand for premium smartphone lenses and order cuts from Huawei are the two major factors weighing on product prices and lens shipments,” Bloomberg Intelligence analyst Charles Shum wrote this week of Largan. “Huawei, Xiaomi and other smartphone makers are expected to focus on selling more mid- and low-end models to maintain sales volume during the pandemic crisis.”The takeaway here is that consumers may not be rejecting the latest iPhone itself, but simply saving their money and opting not to buy any new top-end smartphone amid the global economic uncertainty. Alternatively, the work-from-home trend and lack of other places to spend money (autumn in Paris, anyone?) could spur people to upgrade.With the iPhone to be revealed next week, and the sales launch likely to be absent the ritual queues outside Apple retail stores, we won’t know how well it’s doing until press releases (to be glowing, of course) and news reports (fawning, perhaps) roll in during subsequent weeks. Market researchers may be able to give us hints by late October.One of the comforting aspects of a September iPhone release was how it allowed revenue at suppliers to be broken into two distinct phases: ramp-up, reveal, and release in the third quarter; followed by momentum and holiday-season demand in the fourth. This year, it will be crammed into just one period. The first weeks of November and December will be critical for the analysts, traders and investors who parse supply-chain data to get a handle on the world’s biggest tech company. Well before firms report quarterly revenue, Taiwanese companies are required to announce monthly sales. If October numbers, to be reported by Nov. 10, don’t show massive spikes, then expect an overreaction in tech stocks. Some bulls will hold on for November data, out in early December, to prove themselves right. Many will wonder whether such data shows true strength, or is merely catch-up demand from a delayed release. But we won’t get a fuller picture until early January, after the quarter is closed.This all means that not only must consumers wait longer to get their hands on the shiny new toy, but supply chain watchers will be left on tenterhooks longer than usual.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

,

Instant Quote

Enter the Stock Symbol.

Select the Exchange.

Select the Type of Security.

Please enter your First Name.

Please enter your Last Name.

Please enter your phone number.

Please enter your Email Address.

Please enter or select the Total Number of Shares you own.

Please enter or select the Desired Loan Amount you are seeking.

Please select the Loan Purpose.

Please select if you are an Officer/Director.

High West Capital Partners, LLC may only offer certain information to persons who are “Accredited Investors” and/or “Qualified Clients” as those terms are defined under applicable Federal Securities Laws. In order to be an “Accredited Investor” and/or a “Qualified Client”, you must meet the criteria identified in ONE OR MORE of the following categories/paragraphs numbered 1-20 below.

High West Capital Partners, LLC cannot provide you with any information regarding its Loan Programs or Investment Products unless you meet one or more of the following criteria. Furthermore, Foreign nationals who may be exempt from qualifying as a U.S. Accredited Investor are still required to meet the established criteria, in accordance with High West Capital Partners, LLC’s internal lending policies. High West Capital Partners, LLC will not provide information or lend to any individual and/or entity that does not meet one or more of the following criteria:

1) Individual with Net Worth in excess of $1.0 million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse, at the time of purchase exceeds $1,000,000 USD. (In calculating net worth, you may include your equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.)

2) Individual with $200,000 individual Annual Income. A natural person (not an entity) who had individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

3) Individual with $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

4) Corporations or Partnerships. A corporation, partnership, or similar entity that has in excess of $5 million of assets and was not formed for the specific purpose of acquiring an interest in the Corporation or Partnership.

5) Revocable Trust. A trust that is revocable by its grantors and each of whose grantors is an Accredited Investor as defined in one or more of the other categories/paragraphs numbered herein.

6) Irrevocable Trust. A trust (other than an ERISA plan) that (a)is not revocable by its grantors, (b) has in excess of $5 million of assets, (c) was not formed for the specific purpose of acquiring an interest, and (d) is directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of an investment in the Trust.

7) IRA or Similar Benefit Plan. An IRA, Keogh or similar benefit plan that covers only a single natural person who is an Accredited Investor, as defined in one or more of the other categories/paragraphs numbered herein.

8) Participant-Directed Employee Benefit Plan Account. A participant-directed employee benefit plan investing at the direction of, and for the account of, a participant who is an Accredited Investor, as that term is defined in one or more of the other categories/paragraphs numbered herein.

9) Other ERISA Plan. An employee benefit plan within the meaning of Title I of the ERISA Act other than a participant-directed plan with total assets in excess of $5 million or for which investment decisions (including the decision to purchase an interest) are made by a bank, registered investment adviser, savings and loan association, or insurance company.

10) Government Benefit Plan. A plan established and maintained by a state, municipality, or any agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5 million.

11) Non-Profit Entity. An organization described in Section 501(c)(3) of the Internal Revenue Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life income funds), as shown by the organization’s most recent audited financial statements.

12) A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

13) A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

14) A broker-dealer registered under the Exchange Act.

15) An insurance company, as defined in Section 2(13) of the Securities Act.

16) A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act.

17) A small business investment company licensed under Section 301 (c) or (d) of the Small Business Investment Act of 1958.

18) A “private business development company” as defined in Section 202(a)(22) of the Advisers Act.

19) Executive Officer or Director. A natural person who is an executive officer, director or general partner of the Partnership or the General Partner, and is an Accredited Investor as that term is defined in one or more of the categories/paragraphs numbered herein.

20) Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is a natural person who is an Accredited Investor, as that term is defined in one or more of the categories/paragraphs numbered herein.

Please read the notice above and check the box below to continue.

Singapore

+65 3105 1295

Taiwan

Coming Soon!

Hong Kong

R91, 3rd Floor,
Eton Tower, 8 Hysan Ave.
Causeway Bay, Hong Kong
+852 3002 4462