That trillion dollar milestone might have to wait.
Apple Inc. (AAPL) shares fell 1.8% Friday following a report that the tech giant has warned companies in its supply chain to expect a steep drop in iPhone component orders into the second half of the year.
Japan's Nikkei Business Review said suppliers were asked to prepare for an order flow of components based on the sale of 80 million new iPhones, a figure that would be around 20% lower than the 100 million figure used last year to prepare for the sale of new iPhone 8, iPhone 8 Plus and iPhone X units. Apple is reportedly preparing three new handsets for its traditional September launch, two with iPhone X-like organic light-emitting diode (OLED) screens and one with a traditional liquid crystal display screen used in the iPhone 8.
Several stocks in Apple's European supply chain were notably weaker, as well, following the report, with Austria-based AMS AG, (AMSSY) which earns an estimated 35% of its revenue from chip sales to Apple, falling 5.5%, Frankfurt-listed Dialog Semiconductor (DLGNF) sliding 4.11% and STMicroelectronics (STM) retreating 1.77% in Amsterdam.
Market research group GfK estimated that global smartphone demand fell 25, to 347 million units, in the first quarter of this year, led by a steep 6% year-on-year decline in China and a 5% drop in North America. IDC has forecast IOS-drive smartphone sales will grow 2.6% this year to 221.4 million units.
Apple CEO Tim Cook, however, struck an upbeat tone last month when his company posted a stronger-than-expected bottom line of $2.73 a share for the three months ending in March, the company's second quarter, and said revenues hit $61.1 billion thanks to the sales of 52.2 million iPhone units.
Apple also issued a robust third quarter outlook, forecasting sales of between $51.5 billion and $53.5 billion, suggesting still-solid demand for its smartphone suite despite persistent concerns that global demand is waning.
"I don't buy the view that market's saturated," Apple CEO Tim Cook told investors on a conference call following the company's earnings last night. "I don't see that from a market point of view or - and certainly not from an iPhone point of view."
"I think the smartphone market is sort of like the best market for a consumer product company in the history of the world," he added. "That's how I feel about it. It's a terrific market, and we're very happy to be a part of it."