Apple supplier Corning has warned third-quarter sales will be below expectations, due to a drop in demand from smartphone producers.
The forecast from Corning on Tuesday details its main expectations for the Q3 2023 results, for the three-month period ending in September. The news isn't great for investors, as a reduction in revenue is expected for the period.
While Wall Street estimates expect $3.7 billion in revenue for the glass producer, Corning believes the amount will be closer to $3.5 billion, reports Reuters.
In explaining the lower-than-anticipated forecast, Corning says it has been a victim of lower demand from smartphone producers who rely on its glass. Its clients are allegedly trying to reduce an inventory backlog, prompted by high inflation and increases in interest rates affecting consumer spending habits.
Corning has, to its credit, made moves to reduce costs to counter the slump, resulting in an increase of its core gross margin of 100 basis points to 36.2%.
Corning CEO Wendell Weeks said "We expect to continue improving profitability and cash flow despite our relatively muted sales environment."
During its second-quarter results, Corning reported its optical communications unit dropping revenue by 19% year-on-year, while specialty materials endured a 13% YoY drop.
The smartphone market at large is having a tough time, with Q2 seeing the eighth consecutive quarter of year-on-year declines. While Apple is seeing market share growth by maintaining its position, the average for the market was an 8% YoY decline.