Apple supplier hints at more bad news for iPhone

Semiconductor conductor company Skyworks Solutions reported its earnings for the second quarter of the year on April 30 and its financials indicate that demand for the iPhone was lower than expected.

Skyworks makes chips that allow smartphones to connect to wireless networks, so its fate is directly tied to smartphone sales. As Apple Insider notes, Apple is Skywork's biggest client, which is why the company is regarded as a proxy for iPhone's demand. In 2023, sales to Apple made up 64 percent of Skyworks's total revenue, and 85 percent of that came from iPhone sales. This makes the iPhone the single most important product for Skywork.

For Q2 2024, Skyworks reported revenue of $1.046 Billion, a year-over-year decline of 8.7 percent. The company said that it saw "below normal seasonal trends" and "lower-than-expected end market demand" during the March quarter and expressed an intention to diversify beyond smartphones by saying that it plans to "leverage our connectivity technology across edge-connected IoT devices, automotive electrification and advanced safety systems, and AI infrastructure."

Skyworks doesn't seem optimistic about the next quarter either, and says that it expects the "mobile business to be down sequentially," but notes that this would be because of excess inventory clearing.

Since Skywork heavily relies on Apple, its disappointing performance can be taken as another indicator that the iPhone's demand is weakening, though it must be remembered that the Cupertino giant is not the company's sole customer.

Even as the wider market showed signs of recovery, Apple's sales suffered during the first three months of the year, and they are projected to fall further in China, which is one of its most important markets.

Apple will report its earnings tomorrow and the Wall Street isn't too optimistic about iPhone sales. And since Skywork's sales are largely tied to Apple, it does seem likely that the company will report sluggish iPhone sales for the quarter.