Bad press in Bloomberg, CNBC and Reuters causing a deceptive panic on the supply chain of an iPhone

Several leading news sources are releasing a cloud of speculative rumors claiming that Apple's iPhone sales are-maybe! … in a desperate situation. Revised earnings reports from just five companies – out of Apple's top 200 suppliers – are at the heart of these reports, so take a look at the fragility of these findings.

It is difficult for large halls to let the fruit of the supply chain at your fingertips

Problems faced by Apple's supply chain component manufacturers have once again been cited as proof that the demand for iPhone must be lower than expected. It was very wrong last year and every year for at least five generations of iPhones.

In fact, five years ago, Benoît Evans tweeted"After the last two years, people really should have known that rumors about the production volume of the supply chain for iPhones are worthless."

This year, something new has finally arrived. Write for CNBCSara Salinas wrote: "Apple analysts have a long history of misreading weak iPhone demand based on vendor rumors," which describes in detail how analysts and reporters have been constantly mistaken in trying to # 39; s interpret the data of the supply chain of Apple.

"Stop me if you've heard that before," Salinas wrote. "An analyst at Apple is reducing estimates of iPhone shipments based on the weak indications of suppliers, which has resulted in a drop in the company's inventory."

A few days later, Salinas reoffended, writing the same clickbait addiction rumors for CNBC. "Rumors about weak iPhone demand are multiplying as at least four Apple suppliers reduce their revenue forecasts," she writes, as if she just did not say a few days earlier than "Apple's network of suppliers is deep and complicated." A supplier is narrowing its prospects. does not necessarily mean that the demand for the iPhone is fallingIf history is a guide , analysts and investors tend to be unnecessarily scared by rumors of an iPhone provider. "

Collaborate with Lauren Feiner from Reuters, Salinas compiled a list similar to Wikipedia's of specific vendors who had all cut their forecasts: AMS AG, Qorvo, Lumentum and Japan Display.

Take a look at the suppliers

Two writers from Bengaluru for Reuters Lumentum, which manufactures the vertical cavity surface emitting laser (VCSEL) used in the TrueDepth Face ID system of the iPhone X, had previously reported a reduction in its revenues, and postulated that it was tied to profit warnings. IQE, which manufactures silicon wafers for Lumentum.

Vibhuti Sharma, another Reuters Bengaluru's writer, also referred to a less-defined problem of "lower demand from smartphone manufacturers" of Japan Display, which makes high-end LED screens used in iPhones.

Sharma also detailed separately for Reuters The RF chip maker Qorvo had reduced its revenue forecast, citing "recent changes in demand for flagship smartphones" from a large customer.

And Mark Gurman's Bloomberg AMS AG, which produces ambient light sensors for iPhone, has recorded a shortfall of about $ 100 million.

"The bad news continues to accrue for Apple Inc. before the crucial holiday season," said Gurman, citing these other three vendors and noting that "Apple was" the biggest customer and the most Big business revenue driver for the four, according to data compiled by Bloomberg.Qorvo gets 36% of Apple's revenue, Lumentum generates 30%, AMS more than 20% and Japan Display gets 55%. "

Bloomberg's data on the dependence of these suppliers on Apple can be found in other reports on these companies, but no one mentions that these data are from 2017, and not data in time. actual relative to current deliveries of the latest models of iPhone. Apple regularly changes supplier and its use of a specific supplier is not a constant.

Let's take a look at the details, but let's start by looking at how it all happened before.

Bloomberg has over-simplified the supply chain of Apple's complex components too much in April

The stories of today regarding these five iPhone providers may seem like a solid reporting work. But for many, it also sounded like solid journalism when Bloomberg Last April, with confidence, she announced in April that the slowdown in the growth of the Samsung display panel producing OLEDs clearly meant that the iPhone X was in big trouble because Samsung was the only provider from Apple for its screens.

This was just part of the "bad news for Apple" that Bloomberg "piled up" earlier this year about the iPhone X. All of this turned out to be totally wrong. Samsung manufactured the OLED panels of the iPhone X well, but it also provided OLED displays for its own Galaxy S9, which Samsung itself admitted to having "lower than expected" sales while Apple had announced that the iPhone X remained its best-selling phone, realizing the quarter after a quarter of strong iPhone sales in a sector losing momentum.

Plus, it was not just a matter of Bloomberg draw the wrong conclusion of the facts in question; Gurman's report actually avoided any mention The fact that Samsung's display unit also explained that it had problems with both LCDs and OLEDs and that this was due to fierce competition from other vendors rather than customer discounts like Apple.

Analysts, journalists and bloggers have not thought about this, they simply repeated the story Bloomberg conceived – one who avoided mentioning facts that undermined his biased narrative that was ultimately totally false.

Is Lumentum important for Apple?

So what about the panic of vendors this week? Bloomberg The data on the importance of Apple for these providers in 2017 (detailed above) may seem notable, but that does not mean that these suppliers are all as important to Apple today.

Lumentum, the manufacturer of VCSEL that recent reports have cited as being so essential for Apple's Face ID products, which now includes its three new flagship iPhones, as well as the new iPad Pro, is not even listed in the list of suppliers of Apple 2018, and is the platelet supplier of Lumentum, IQE.

This may be related to the fact that Lumentum is only one of Apple's VCSEL providers. In fact, the company is a direct competitor of Finisar, the company in which Apple invested $ 390 million of its $ 1 billion state-of-the-art manufacturing fund last December to help build a manufacturing plant in Texas. dedicated to VCSEL, aimed specifically at giving Apple access to a stock of advanced components that were to begin "in the shipping of components from the second half of 2018."

As Apple's key supplier, Finisar's business prospects were so attractive that II-VI Incorporated just paid $ 3.2 billion to acquire the company a week ago. This is unlikely to happen if Finisar's VCSEL business was collapsing due to weak sales of the new Face ID iPhones.

The fact that Lumentum obtained 30% of its Apple revenue last year and now reports that it is facing a shortfall attributed to a customer who is "one of our biggest" is not a surprise for the iPhone XS or XR. This should be an expectation, based on publicly known facts of the past year. Apple has invested more than a third of its advanced manufacturing fund in an alternative supplier, dedicated to producing the same parts as Lumentum, supplied exclusively to Apple!

It also means that IQE, a provider of Lumentum, should also face economic problems, as Apple has strategically outsourced its VCSEL offering. Any analyst or technical writer would need to know to search AppleInsider archives.

Instead, a variety of technical writers, including even the author of "Beware of rumors about the supply chain" CNBC "We're assuming that if Lumentium were called" iPhone Provider ", any negative news about the company was bad news for Apple, just as Samsung's display issues were falsely related to Apple. few months ago. Bloomberg.

Is Japan Display important for Apple?

Japan Display is a major supplier to Apple and is one of the largest of the above-mentioned five top news providers. But the impact of Apple on the financial results of Japan Display is neither simple nor recent.

The company was building the advanced LCD screens used by iPhones before the move from iPhone X to OLED. Yet even in early 2016, he had announced a loss of $ 293 million, even though Apple was selling an iPhone 6s, which was close to the "super cycle" of the iPhone 6 in terms of # 39; units. The losses on Japan Display did not mean that Apple would not sell iPhones. At the time, the company had stated that she hoped that Apple would soon switch to OLED, which, according to it, could help it to increase its sales even if it does not. It was not yet able to mass-produce OLED screens.

Japan Display subsequently obtained a US $ 636 million bailout to buy Joled, a former team merger at Sony and Panasonic, with the specific goal of entering the OLED market.

But that did not materialize by making Japan Display Apple the source of OLED panels. Instead, Apple's iPhone composition has shifted from the LCD screen to the screen in 2016 to that of last year, where the most popular model was the ### 39, iPhone X using an OLED panel from Samsung, to spend this year on two of the three flagship models: OLED, and Japan Display still producing only LED Screens for Apple.

As in the case of Lumentum, there is no reason to expect that a former major supplier is now fighting to maintain its revenues, with Apple resolutely turning to a range of products including alternative supplier components. And, in the same way that analysts can only guess the mix of iPhones sold by Apple, the problems of Japan Display do not tell us anything else precise – almost certainly -, Apple is currently selling less than LCD phones now that its two high-end models now use OLED models.

Again, this is public information that no one is reporting, because it's so much more tempting – and easy – to simply list "Apple vendors reporting problems" without knowing anything specific about them. about Apple's highly complex and ever-evolving supply chain. global partners.

Is AMS AG important for Apple?

The other two vendors most often cited in recent reports as having warned against profits directly related to iPhone sales are AMS and Qorvo. But as with the other providers above, they are not manufacturers of exclusive components to Apple.

AMS has long been manufacturing the ambient light sensor used by Apple in iPhones, but also provides Samsung with ASL components for its Galaxy S9 and earlier models. Apple requires higher ASL quality than Samsung uses, and Apple associates the AMS part with a separate proximity sensor (and Face ID modes, a "near infrared imaging" field illuminator) built by STMicroelectronics. Samsung uses a combined AMS part that works as both a proximity sensor and a proximity sensor.

AMS also provides chips used in other products, including the Apple Watch 4 series. This helps underscore just how vague and simplistic correlations between the production of a supplier and the production of 39, an iPhone have no meaning.

In addition, if AMG generated 20% of its revenue from Apple last year and reported revenue problems this year, is it more likely that its problems are due to the fact that Apple does not sell iPhone, or about 80% of its business is exposed to risk? smartphones outside of Apple, including the disappointing sales of Samsung's Galaxy S9, which seem to use more AMS silicon than Apple iPhones?

Is Qorvo important for Apple?

If this sounds familiar to you, remember that the same thing happened before with Qorvo, which was considered an "iPhone provider" in 2016 after issuing a profit warning.

The reality was that Qorvo had recently formed a merger between TriQuint Semiconductor and its former rival, RF Micro Devices. The biggest customer of TriQuint was Apple's fabulous partner, Foxconn, but the biggest RFMD customer was Samsung – no one was connecting to it even though Samsung was experiencing major smartphone demand problems, stuck between the iPhone 6 Apple and a cheaper wave of competition from China.

The same simplistic "iPhone Provider" identification was also used with the Cirrus audio chip maker. When he announced strong profits, a credit was granted to his diversification away from Apple, which used to account for 73% of its sales. Samsung then became an increasingly important Cirrus customer. Yet when Cirrus warned of a shortfall, the company suddenly took the name of "iPhone provider".

It was assumed that it was Apple that was responsible for the Cirrus woes, rather than the well-known issue of Samsung's Galaxy S6, S6 Edge and Note 5, both of poor quality, all high-end products with Cirrus chips that were crumbling so badly that Samsung Vice President Lee Jae Yong warned Shin Jong Kyun, the former head of Samsung Mobile, after the collapse of the group's profits that year.

Meanwhile, Apple was selling the largest number of iPhones ever registered in a "super cycle" that has transformed the premium smartphone landscape, leaving Apple in the forefront, even as other phone makers were watching their power of premium pricing and their collective sales platform.

AMS, Qorvo, Cirrus and other component manufacturers remain all tied to Samsung, the South Korean company continuing to report problems to make money in the tough market of basic Android phones. However, when one of these companies reports problems, the blame is supposed to be Apple's fault even without these companies ever appointing Apple.

Is dialogue important for Apple?

Dialog Semiconductor is another vendor that has a long relationship with Apple for its integrated power management ICs. Dialogue specifically noted at Reuters that he saw no reduction in Apple's orders based on low demand, despite the fact that three quarters of its business came from Apple, a much higher proportion than all the others suppliers cited as having been exposed to Apple and facing problems related to a "major customer".

The company's chief executive, Jalal Bagherli, recently announced that he has won contracts with Apple in 2019 for subsystem components and chargers. Apple has also just invested $ 600 million in an agreement with Dialog, half of which is earmarked for Dialog's power management technologies, which are licensed, and acquire more than 300 employees, representing 16 million people worldwide. % of the workforce of the company. The rest is spent on future purchases of assets and components over the next two years.

Dialog warned of future problems related to profitability during the transition far from his dependence on Apple, following the sale of its consumer management IP and its talents.

Last December, Japan Nikkei, which has proven to be perpetually misinterpreting rumors about Apple's supply chain, said that Dialog would be in trouble because Apple could start creating its own energy management chips as early as this year . This helped reduce Dialog's share price by about a third, but that was not true either. In fact, Dialog said it was already working with Apple on chip projects for use in Apple products, to be released in 2019.

A lack of basic verification of the facts

None of these facts matter as long as novice writers will continue to produce unthinking articles that are repugnant to the idea that a "long list of vendors doing business with Apple hurts a market "in a market where smartphone sales are declining and where Apple is making almost all the money.

AMS, IQE and Lumentum, Japan Display and Qorvo all have good reasons to struggle in the consumer electronics sector, which has nothing to do with Apple. Dialog says it will be worse without Apple. Finisar is doing very well as a supplier who seems to have taken Lumentum's business with Apple.

Apple lists its top 200 suppliers worldwide, claiming that they represent "98% of the material sourcing, manufacturing, and assembly costs of our products." If the sales of a new iPhone represented millions of units representing billions of dollars in components, it would not be just five small companies issuing warnings on their profits, while companies more exposed to Apple say that nothing seems to be wrong with regard to demand.

And the news would not come only from unknown writers in India, a Bloomberg blogger with terrible experience to correctly interpret the rumors of Apple's supply chain, and a CNBC Writer who can not follow his own advice not to draw false conclusions about thin rumors vaguely related to partners in the supply chain of Apple.