Apple’s Suppliers Expect Weak Demand for iPhone 7

Apple is currently experiencing its first year-over-year decline in iPhone sales since 2003, which also reflects on its numerous suppliers. According to CEO Tim Cook, this is caused by the stretched out upgrade cycle for the larger iPhone 6 and iPhone 6s series.

Even though the company has recently released a more affordable model called iPhone SE, it is expected that decline will continue into the second half of the year.

According to Nikkei, this is causing problems with Apple’s suppliers who are now more careful on their part. Furthermore, it is said that suppliers are not satisfied with the next generation iPhone and its lack of innovation, which they feel will cause weak demand for iPhone 7.

“Suppliers are saying that they are getting fewer orders for the second half of this year compared with the year-ago period,” a source said. “The traditional peak season this year will not be able to compare to the past few years.”

The report also claims that Taiwanese Semiconductor Manufacturing Company (TMSC) will ship 30% fewer chips in the second half of this year, compared to the year-ago period.

Another source said that for Taiwan Semiconductor Manufacturing Company, the sole supplier of the latest A10 chips used in iPhone 7, its iPhone 6s and iPhone 7 chip shipments for the June to December period will likely shrink to 70%–80% of the level reached in the second half of 2015.

It is expected that Apple will announce its next-generation iPhone in September. Recently leaked CAD drawings are showing that the new models will come without the 3.5mm headphone jack, while a dual-lens camera and Smart Connector will be exclusive to the larger iPhone. We can only wait for September to see what kind of demand for iPhone 7 will happen.