iPhone demand may be shrinking, hints chipmaker Skyworks

Apple iPhone 15 pro AM AH1

Apple’s iPhone might not be selling as well as anticipated. This is the whisper circulating after semiconductor company Skyworks Solutions, a major Apple supplier, released its second fiscal quarter results for the period ending March 2024, hinting at a shrinking demand for the iPhone.

Skyworks’ report revealed a concerning trend: lower-than-expected demand for their smartphone components, particularly in the last quarter. While they don’t explicitly mention the iPhone, Apple is their biggest client. Granted, a significant portion of their semiconductor sales come from the tech giant. This makes the iPhone’s market health a critical factor for Skyworks’ well-being.

“We saw below normal seasonal trends [in our mobile business], with lower-than-expected end market demand,” stated Skyworks CEO Liam Griffin, hinting at the concerning dip in iPhone demand. This follows a reported revenue of $1.046 billion for the fiscal Q2 2024, representing an 8.7% YoY decline.  Apple is set to report its earnings on May 2. But Skyworks’ CEO has already announced plans to diversify, suggesting they might be preparing for a potentially rough iPhone market.

It’s important to remember that Skyworks isn’t the sole supplier of Apple’s chips. There are also time lags involved in the supply chain. So, a temporary sales slump at Skyworks doesn’t necessarily translate to a shrinking demand for the iPhone. However, the trend itself is worrying. The true picture will only become clearer when Apple reports its earnings on May 2. But for now, a cloud of uncertainty hangs over the world’s most popular smartphone.

Smartphone chip market poised for a rebound

Skyworks’ report hints at a shrinking demand for the iPhone. However, a recent analysis by Counterpoint Research offers a broader perspective on the smartphone chip market. Their findings suggest that after two years of decline, the market is expected to rebound in 2024. The projected YoY growth in smartphone AP-SoC shipments is 9%.

This growth is primarily driven by the transition from 5/4nm chips to 3nm chips in flagship phones. Additionally, there’s an anticipated rise in the premium and ultra-premium smartphone segments. TSMC, a major chip foundry and another key player in Apple’s supply chain, is expected to be the key beneficiary of this trend in the long term.

While the immediate future of the iPhone might be uncertain, the broader smartphone chip market appears to be on the cusp of a rebound. However, challenges remain, particularly for SMIC, a Chinese foundry that might struggle to keep pace with the shift towards more advanced nodes due to limitations on equipment access.

Looking further ahead, the arrival of 2nm chips seems likely in 2026, potentially coinciding with the launch of the Vision Pro 2 and iPhone 18 series. This next generation of chips promises even greater performance and efficiency, shaping the future of the mobile landscape.

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