Weak iPhone 7 Demand Predictions Continue With 'Conservative' Chip Orders

Tuesday June 28, 2016 9:00 am PDT by Mitchel Broussard

Apple "is being more conservative" when placing its orders with chip assembler Advanced Semiconductor Engineering, once again suggesting that the 2016 "iPhone 7" will face a weaker demand in comparison to normal cycles, due to a dearth of hardware innovation in the handset (via Nikkei). Apple wasn't specifically mentioned during ASE's recent shareholder meeting, but a reference to "the big client in the U.S." overtly ties in with Apple, which contributed 31.2 percent of ASE's $8.73 billion revenue in 2015.

"The big client in the U.S. is a little more conservative when placing orders this year," said Tien Wu, ASE's chief operating officer, ahead of the company's annual shareholder meeting.

"In the smartphone market, meanwhile, other players besides Apple are more aggressive regarding booking chips this year," Wu said. But, he added, "I don't think anybody is overly aggressive this year, so I don't think there would be any serious inventory correction issue similar to last year."

The doom and gloom forecast for iPhone sales this year have reached a high point in the middle of 2016, with recent reports suggesting the iPhone 7 is unlikely to reverse recent year-over-year declines in sales for the company. Most rumors cite the same reasons: consumer apathy due to a lack of innovation in comparison to last year's iPhone 6s and iPhone 6s Plus.

The biggest hardware revisions of the iPhone 7 are predicted to center around the removal of the 3.5mm headphone jack, the addition of a new dual-lens camera (possibly only on the 5.5-inch model), and restructured antenna bands. Otherwise, the devices are expected to look similar to the iPhone 6s form factor, with a mega-cycle upgrade hitting in 2017 in time for the line's ten-year anniversary.

Tag: nikkei.com

Top Rated Comments

(View all)

JonneyGee

54 months ago

I've said this elsewhere before: changes to contract structures will influence sales numbers in the US more than anything else. Now that phone prices aren't subsidized here anymore, people will wait longer to upgrade. This will not only affect Apple but also all Android manufacturers. Apple is smart to shift to a 3-year cycle as that likely reflects the new reality for most of the customers here.

Overseas, their sales gain each year has mostly been from reaching new countries. There's a glass ceiling there as well as upgrades will be even less frequent in many other countries.

None of this means "peak Apple" has passed – it only means that the market has matured and every company has to shift the way they do things. Apple will be just fine.

Score: 37 Votes (Like | Disagree)

AppleFan91

Man, if the Note 7 is what the leaks are showing and Apple comes out with a phone that has a better camera and removes the headphone jack, they'll see a lot of switching. I love iOS, but the hardware is lagging behind so much now it's getting bad. I mean where's the wireless charging, where's the fast charging, the OLED display,waterproofing, etc. they say it isn't ready and Apple is doing it next year, why? Competitors did it 2 years ago. Is it to protect the margins? Cuz those will shrink for other reasons soon enough.

Score: 15 Votes (Like | Disagree)

QCassidy352

Unless they have successfully kept something from the rumor mill, this is shaping up to be the smallest upgrade they've ever done, one year after what is arguably the previous smallest upgrade they've ever done. Not good.

Score: 14 Votes (Like | Disagree)