Apple's suppliers expect business to be tough in the second half of 2016

Apple's suppliers expect business to be tough in the second half of 2016
Industry analysts are putting their psychic hats on and see bad times ahead for those tech suppliers in Taiwan who supply bigger companies, like Apple, with parts. A source told the Nikkei Asian Review that these vendors are seeing slower orders for the second half of the year. For example, TSMC, the company that will produce 100% of the A10 chips for the Apple iPhone 7 and Apple iPhone 7 Plus, sees chip shipments in the second half of this year declining to reach only 70% to 80% of last year's deliveries.

Apple is TSMC's largest customer, accounting for 16% of the firm's $25.93 billion USD in revenue that it rung up last year. That resulted in profits of $9.83 billion USD for the chip manufacturer. But one person who is said to be familiar with TSMC's operations says that revenue growth will be up just 4% this year, and operating profits will be flat all because of the slow down in orders from Apple. TSMC itself has predicted 5% to 10% year-over-year growth in revenue and operating profits for 2016, although most analysts say that growth at that level can not be attained by TSMC this year.

A drop in demand for Apple's next iteration of the iPhone is expected as Apple is rumored to be putting off a major redesign of the handset until 2017. Ming-Chi Kuo, the highly accurate Apple analyst who toils for KGI Securities, says that the next iPhone model will not have many "attractive selling points."

Apple's shares hit a new 52 week low today at $89.47, and are currently trading at $90.07. The most valuable company in the world has seen its valuation drop under $500 billion to $493.7 billion. Right behind Apple is Google parent Alphabet, valued at $488.9 billion.

source: NikkeiAsianReview via SeekingAlpha

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