Apple supplier IQE warns on profits in sign of tough smartphone market

More Evidence Emerges of Soft iPhone Sales

This isn't the first sign of bad news for the latest iPhones. ON Semiconductor Corp. fell 5.9 percent, Skyworks Solutions Inc. slid 5 percent, and Finisar Corp. dropped 4 percent. The Taiwan Weighted Index was down around 1.6 percent.

According to StreetAccount, a couple of securities firms are fine-tuning their thoughts on what is going on now with the Apple iPhone. With November already in full swing, it will be interesting to see if Apple embarks on a huge iPhone XR marketing push over the coming weeks.

Although Apple never said as much when it launched the Apple iPhone XR in September, its fairly obvious the device is meant to be more a direct competitor with the Android market. That makes them more likely to cut prices when Apple comes back to the negotiating table. The Street values net income growth much more highly than earnings per share growth, and thus Apple's aggressive share repurchase programme is not necessarily a value creator in the short term.

Apple shares fell to their lowest in more than three months on Monday as three suppliers issued warnings on results that pointed to weakness in iPhone sales.

"With no new technology in sight next year for the supply chain, this is not ideal for the companies involved", said Nicole Tu, a Taipei-based analyst at Yuanta Investment Consulting.

More news: CNN to sue over Acosta's White House press pass?

Lumentum on Monday slashed its profit and revenue forecast for the current quarter, while IQE warned that current-year results would be lower.

Shares in Lumentum fell almost 30 percent, dragging down shares of other suppliers and chipmakers. In its most-recent quarter, Apple reported nearly no increase in the number of iPhones sold, but revenue from that business jumped 29 per cent from a year earlier.

"Longer-lasting products could lead to higher customer satisfaction, potentially enable Apple to charge higher prices for its devices, and would help fulfill the company's environmental objectives", Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co., wrote Monday in a note to investors.

"(This) indicates that the company itself is not confident about its performance at the moment", said Park Jung-hoon, a fund manager at HDC Asset Management, which owns Samsung Electronics shares.

"Hon Hai's gross margin probably narrowed in 3Q as lower-margin, higher-priced products such as new iPhones constituted a greater share of its revenue mix", Simon Chan, an analyst at Bloomberg Intelligence, wrote in a Nov.5 note.

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