Apple supplier suffers shock 75% drop in orders

Being an Apple supplier can be an unpredictable business. Suppliers whose earnings rely on Apple can take a major tumble if they suddenly fall out of favor.

That’s what happened this week with AAC Technologies Holdings. The acoustic component maker’s shares fell dramatically on Tuesday after it announced a 75 percent decline in orders.

AAC Technologies’ shares declined 13 percent with the news. The Hong Kong firm announced that its January through March profits would be 65 to 75 percent lower than one year earlier. It also noted that its gross profit margin would narrow.

“In addition to a usual weak seasonal quarter, the company’s revenue for Q1 2019 is expected to be significantly negatively affected by reduced orders from customers,” the company said in a filing.

The challenges of being a supplier

AAC doesn’t just serve Apple, but Apple is a major customer. It manufactures acoustic and haptic components for iOS devices. Apple has recently revealed that iPhone sales are declining. This has had a major knock-on effect with suppliers, especially those which rely on Apple for much of their earnings.

Falling iPhone sales aren’t the only reason for AAC’s decline, however. It appears like Apple may be switching around some of its orders. Luxshare Precision Industries, another Apple supplier which competes with AAC, said on Monday that net profits will rise 61 percent. This is supposedly due in part to it winning iPhone orders.

It’s no wonder that seasoned Apple suppliers like Foxconn preach the value of not relying too much on any one company.

Source: Reuters