Apple suppliers like Largan & TSMC turn elsewhere in wake of weak iPhone sales

Largan makes fingerprint recognition lens modules and 3D sensing lenses, and is pursuing orders from Samsung, Huawei, and Xiaomi, DigiTimes sources said. The firm saw its profitability slip in 2018 even as its earnings per share remained high at $5.90.

TSMC, which manufactures Apple's A-series processors, is warning that its growth will slow this year, albeit in tandem with the broader semiconductor and foundry markets. In 2017 and 2018 Apple is estimated to have made up 22 percent of TSMC revenues, an increase from 17 percent in 2015 and 2016. Qualcomm is expected to rejoin TSMC as a processor client later in 2019 — significant as it makes the modems and Snapdragon CPUs found in many Android devices. Apple has all but ditched Qualcomm as a modem supplier given global legal battles.

Two of Apple's assembly partners, Foxconn and Pegatron, are likewise trying to attract more outside business, the sources added.

iPhone sales fell 15 percent year-over-year in the December quarter, resulting in billions less revenue than Apple originally guided for. The company primarily blamed this on the Chinese market, but also cited factors like discounted battery replacements, which saw 11 times more traffic than the company planned for.

DigiTimes is notably poor at predicting Apple's specific plans. However, it is a reliable source on supply chain business — which this report clearly classifies as.

Less clear is how well iPhone sales are currently doing. While Morgan Stanley analyst Katy Huberty said that Chinese demand is "recovering," other researchers have pointed to poor performance in Apple's supply chain as evidence there's a long way to go. It's typically thought that growth won't resume until new iPhones ship this fall.