With Apple sales slumping, Taiwanese suppliers sink into a sea of red ink

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The rapid development of Taiwan's technology sector has been fed in no small part by Apple's nearly insatiable demand for components and complex manufacturing processes, but the ride has turned rough for many of the island's tech firms.

Consternation over falling iPhone and iPad sales isn't limited to Cupertino, according to the Nikkei Asian Review. Nearly all of Apple's major suppliers — a list which includes most of Taiwan's largest tech companies — have reported or expect to report quarterly losses that mirror Apple's own, both in rarity and magnitude.

Of 19 Apple suppliers tracked by Nikkei, 15 saw year-over-year declines. iPhone sales saw their first-ever decline last quarter, falling from 61 million handsets shipped a year ago, to 51.2 million units in the March 2016 quarter.

Affected firms include many relatively smaller players like camera component supplier Largan Precision — which blamed a "significant scale-back of orders from a major customer" — and display company AU Optronics, though the damage goes up and down the supply chain. Even huge and diversified OEMs like TSMC and Pegatron have been caught up in Apple's ebbing tide.

Some believe that the worst may not be over.

"We all know that the first half is terrible. We are not very optimistic about the second half either and we doubt whether Apple's new iPhone 7 can become a hit," Fubon Securities analyst Arthur Liao told Nikkei.

Many of these companies have little latitude to make changes. Turning Apple away means losing an effectively irreplaceable amount of business, especially as the second-largest player — Samsung — does much of its own manufacturing.


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