14 DAY TRIAL // Apple’s CEO Tim Cook has recently updated the company’s quarter expectations, confirming the iPhone isn’t selling as good as anticipated.
As a result, an important share of Apple’s suppliers is now expecting revenue declines too, and two of the companies that are most likely to be hit are Samsung and SK Hynix.
As per The Korea Times, several units owned by Samsung now project earnings drops in the first half of the year. Samsung Display manufactures OLED panels for the iPhones XS, while Samsung Electronics makes memory chips.
Additionally, SK Hynix, which builds memory chips as well for Apple’s iPhone, is expecting a significant hit, as its business almost entirely relies on orders from the Cupertino-based giant.
Apple supply chain hit by weak iPhone demand
Other Apple partners, including LG Display, which supplies LCD panels for the iPhone XR, are likely to be affected as well, especially as sales of the new iPhone generation aren’t projected to recover in the coming quarter.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Tim Cook was quoted as saying in a letter he sent to Apple investors in early January.
Cook blamed the growing tension between the United States and China and the battery replacement program for the weaker iPhone sales. Analysts believe one of the main reasons for the poor sales performance of new iPhones is the high price, as the top-of-the-range iPhone XS Max costs $1,449 in the United States.
Meanwhile, Apple doesn’t seem to be too keen on adjusting iPhone pricing, despite the company already announcing a series of changes that would eventually make its devices more appealing to potential buyers. Apple has increased the trade-in value of older iPhones, while also working with a number of carriers to offer subsidies when buying new iPhone models.