(Bloomberg Opinion) — For the first time since 2011, Apple Inc. didn’t release a version of its flagship iPhone in September. That delay has had a massive ripple effect through its network of vendors, which makes parsing supply-chain data even more challenging than usual.
Since at least March, we knew that the next installment of the iconic device would be pushed back due to Covid-19. The pandemic initially hit manufacturing lines in China, but continued to impact the rest of the global lineup of companies that contribute to the product, all the way back to the team that develops it in Cupertino.
Foxconn Technology Group is the most obvious example. Its Hon Hai Precision Industry Co. unit, which assembles iPhones at factories chiefly in China, posted a 21% drop in September sales Monday. It’s not alone. Largan Precision Co., which makes camera lenses for smartphones, reported a decrease of 22%.
The declines resulted in a 7% fall in third-quarter revenue at Hon Hai, the largest for that period in over a decade. Largan had it worse, plummeting 20% for the quarter. Taiwan Semiconductor Manufacturing Co., the major provider of chips for gadgets, is expected to post 11% quarterly growth when it reports sales Thursday. That’s respectable, but slower than recent quarters and could be further hurt by a a strengthening Taiwan dollar.
What makes the conundrum more revealing, and at the same time confusing, are the different tales being told at these companies.
Largan’s woes, for example, aren’t limited to the iPhone delay. The September decline wasn’t a one-time event, and actually followed double-digit drops in the previous two months, partly reflecting developments at Huawei Technologies Co. and Xiaomi Corp.
“Weakening demand for premium smartphone lenses and order cuts from Huawei are the two major factors weighing on product prices