Apple has reportedly warned its supply chain of plans to cut 20 percent of new iPhone component orders. This news triggered a drop in Apple’s valuation, with shares falling 2.1 percent in U.S. pre-market trading.
Shares in Apple suppliers including AMS AG, Dialog Semiconductor, STMicroelectronics and Infineon Technologies also fell as a result of the news.
Don’t make any rash decisions
Before anyone panics too much, however, it’s worth noting that stories like this have mislead customers before. As my Cult of Mac colleague Ed Hardy wrote in May, virtually everyone got their iPhone X sales predictions wrong because they assumed stories such as this were correct at face value.
For instance, at one point Samsung said it was experiencing slow demand for its OLED displays, leading to analysts assuming this was because no-one was buying the iPhone X. When Apple finally got around to reporting its numbers, they were considerably more impressive than many people had assumed.
One of the issues with statistics like the one presented today is that it ignores the complexity of Apple’s supply chain, which comprises hundreds of different companies.
Since Apple likes to diversify its supplier base wherever possible — thereby giving it more negotiating room and lowering the risk of potential individual failure points — judging a few suppliers’ order numbers can be misleading for Apple as a whole. Tim Cook himself has previously warned investors about making this mistake. And, hey, he would know, right?
Source: Bloomberg
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
