Divergent results for Apple suppliers highlight memory price squeeze ahead of new iPhone
Two major Chinese suppliers to Apple posted divergent first-half results, underscoring how soaring memory prices are squeezing profits even as component makers pin their hopes on upcoming iPhone releases for a second-half rebound.
Intelligence analysis by Llama
Divergent results for Apple suppliers highlight memory price squeeze ahead of new iPhone. Two major Chinese suppliers to Apple posted divergent first-half results, underscoring how soaring memory prices are squeezing profits even as component makers pin their hopes on upcoming iPhone releases for a second-half rebound.
Imagine you're making a smartphone, and you need a special kind of glass to make it work. The company that makes this glass is having trouble because the price of the glass is going up, and they can't sell as many phones as they used to. This is a problem for Apple, because they need this glass to make their new iPhone. But another company that makes a different kind of glass is doing well, because they're making a special kind of glass that people want to use in their foldable phones.
Analysis
Apple Suppliers Face Memory Price Squeeze Ahead of New iPhone
Two major Chinese suppliers to Apple, Lens Technology and Luxshare Precision Industry, have posted divergent first-half results, underscoring the impact of soaring memory prices on the tech industry. Lens Technology, a Shenzhen- and Hong Kong-listed maker of smartphone glass screens, saw its net income nearly halve to 577 million yuan (US$85.8 million) in the six months through June, as revenue dropped 12.4 per cent to 28.9 billion yuan. The company blamed the sales slump on soaring memory costs in the consumer electronics industry, which dampened market demand and forced the firm to scale back production in its Xiangtan factory. Exchange rate fluctuations also squeezed profits, the company said. In contrast, Luxshare Precision Industry, another key supplier to Apple, reported a 14.6 per cent increase in revenue to 24.4 billion yuan in the first half, driven by strong demand for foldable handsets. The company's net income rose 12.6 per cent to 1.4 billion yuan. Luxshare's success is attributed to its ability to adapt to the changing market trends and capitalize on the growing demand for foldable handsets. The company's focus on high-end components, such as ultra-thin glass (UTG), colorless polyimide film, and 3D glass covers, has enabled it to maintain its market share and even gain a competitive edge. The divergent results of Apple suppliers highlight the challenges faced by the tech industry in the face of soaring memory prices. As component makers pin their hopes on upcoming iPhone releases for a second-half rebound, it remains to be seen whether they will be able to overcome the current pricing pressures and maintain their market share.
Key points
- Two major Chinese suppliers to Apple posted divergent first-half results, underscoring the impact of soaring memory prices on the tech industry.
- Lens Technology saw its net income nearly halve to 577 million yuan (US$85.8 million) in the six months through June, as revenue dropped 12.4 per cent to 28.9 billion yuan.
- Luxshare Precision Industry reported a 14.6 per cent increase in revenue to 24.4 billion yuan in the first half, driven by strong demand for foldable handsets.
- The divergent results of Apple suppliers highlight the challenges faced by the tech industry in the face of soaring memory prices.
If the upcoming iPhone releases are successful, Apple suppliers like Luxshare Precision Industry may be able to overcome the current pricing pressures and maintain their market share. Additionally, the growing demand for foldable handsets could lead to increased sales and revenue for suppliers like Luxshare.
If the memory price squeeze continues, Apple suppliers like Lens Technology may struggle to maintain their market share and profitability. This could lead to a decline in sales and revenue for these suppliers, making it difficult for them to adapt to the changing market trends.
