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iPhone lens maker Largan's sales suffer on slowing Chinese demand

Sales dropped 33.9 per cent from a year earlier, while Apple slashed its revenue outlook for the first time in almost two decades

Falling demand for Apple's phone in China has hit suppliers of parts. AFP
Falling demand for Apple's phone in China has hit suppliers of parts. AFP

Largan Precision, which supplies camera lenses to Apple, said revenue in December fell by a third amid weakening appetite for iPhones in China.

Sales dropped 33.9 per cent from a year earlier to New Tiawanese (NT) $3.23 billion ($104.9 million), and were in line with Largan’s estimates, a company spokeswoman said on Saturday. The company, which also makes lenses for Huawei Technologies and Samsung Electronics, said revenue in January is expected to be "flattish from the previous month”.

Apple said on January 2 that China sales came in lower than expected in the holiday quarter when it slashed its revenue outlook for the first time in almost two decades. The announcement triggered a 10 per cent decline in Apple shares the next day, the biggest drop in almost six years, and drove down the stocks of many suppliers to the company. Largan shares declined about 5 per cent over the past two sessions, according to Bloomberg.

President Donald Trump on Friday downplayed the sales results from Apple.

When asked if he was concerned about Apple's share price, he said: "I’m not. I mean look, they’ve gone up a lot.”

Shares of Apple closed at $148.26 apiece on Friday, down about 5.1 per cent over the week week. Apple shares fell 7 per cent in 2018 but are still up about 24 per cent since Mr Trump took office in January 2017.

He also said China's weakening economic growth puts the United States in a strong position as negotiators from the world's two largest economies prepare for trade talks this week.

The discussions in Beijing come after Mr Trump and President Xi Jinping in December agreed to a 90-day truce in the trade war as they sought to strike a deal. "I think we will make a deal with China," Mr Trump said at the White House after a meeting with Democratic and Republican policymakers. "I really think they want to. I think they sort of have to."

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Beijing on Friday cut bank reserve requirements for a fifth time this year amid slowing growth at home and punishing US tariffs on exports, Reuters said.

Despite the slowdown in Chinese demand for iPhones, Largan’s results came in better than some buy-side managers’ expectations as they were estimating December sales to be as low as NT$2.6bn, according to Jeff Pu, an analyst at GF Securities. Sales of about NT$3.23bn in January would also beat some analyst estimates, he said.

“Largan’s December result and guidance for January show that while iPhone demand continues to be tepid, Chinese smartphone makers are not faring as bad as feared,” Mr Pu said. “Meanwhile, orders from Samsung are also making minor contributions to its revenue.”

Updated: January 5, 2019 05:31 PM

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