From Tyler Durden: In a sign that investor enthusiasm about the Apple Inc. (NASDAQ:AAPL) “rebound” may have been premature, Digitimes reports that Apple has begun to reduce orders for iPhone 7s as initial “sales momentum has started fading” according to suppliers.
The Digitimes sources said that initial shipment momentum of the iPhone 7 was in part driven by strong demand for the jet black iPhone 7 models and in part by the mishap brought upon by Samsung Galaxy Note 7. However, demand for the iPhone 7 devices in China and other markets has scaled down significantly since their launch less than three months ago, the sources noted.
However, always willing to dismiss a weakness on behalf of Apple as a one-time event, instead of paying attention to sales performance of the iPhone 7 devices, component suppliers and consumers alike have been shifting their focus to the next generation iPhone to be released in 2017, commented the sources.
Market rumors have indicated that the next generation iPhone will come with OLED displays, glass cases, dual-lens cameras, enhanced CPUs, and advanced sensors, while supporting mixed reality (MR) and wireless charging technologies.
Affected by consumers’ high expectations on the next generation iPhone, makers in the supply chain are mostly conservative about the shipment outlook for the iPhone 7 in the first half of 2017, expecting shipments in this six-month period to be at least five million units less than those shipped in the second half of 2016.
Who, in addition to AAPL, is most likely to be impacted: according to Bloomberg, Dialog Semi has the largest exposure to Apple among European suppliers at ~69% of revenue, while other suppliers include AMS, Infineon, Imagination Technologies, STMicro.
On the ETF side of things, the iShares Dow Jones US Technology Sector Index Fund (NYSE:IYW) has the largest Apple exposure at 15.67% of its total holdings, with XLK and VGT next in line with more than 13% exposure.
AAPL was modestly lower this morning, down -0.4% in premarket trading at $110 per share. Year-to-date, AAPL has gained 5%, versus an 8.1% rise in the benchmark S&P 500 index during the same period.
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