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Chip sales are down, but why blame the iPhone SE?

March 31, 2016

In its last earnings call, Apple cautioned that the current quarter’s revenue would see the first year-over-year fall in 13 years. Cupertino predicted a drop of around 11 percent, due partly to the saturation in the market the iPhone is already enjoying. Recent supply chain reports to Digitimes suggests that such a slump might actually continue into the next quarter, as well.

Chip orders from Apple, according to Digitimes’ sources, have been relatively slow during the second quarter of 2016. These sources also suggest that sales of the latest Apple devices have been disappointing, and that chip shipments for the iPhone 6s and iPhone 6s Plus for 2Q16 will be half of those shipped during the first quarter.

Shipments for the new iPhone SE will be unable to offset the fall in shipments for the iPhone 6s and 6s Plus devices in the second quarter, the sources continued. The shipment target for the SE in the second quarter is four to five million units, the sources said.

- Digitimes

Somehow, someone thought the iPhone SE would reverse this trend, and now they’re discouraged that it isn’t. That wasn’t something anybody else was really predicting, so I’m not sure why suppliers would expect that new 4-inch iPhone to make up the difference for declining sales of the flagship models. Yes, the iPhone SE is designed to appeal to those who prefer the smaller form factor, but that doesn’t mean rescuing Cupertino from a slump it had already predicted knowing full well the 4-inch handset was in the pipeline.

The truth is, the estimates of four to five million iPhone SE devices sold during the second quarter might be a serious low-ball number. We’ve already heard reports of 3.4 million preorders in China, and that’s just for a single country. Interest might be lower in other nations, but surely the total sales figures will add up to more than a mere four or five million devices.

We’ll find out just how well Apple fared in the second quarter on April 25, when the next earnings call happens, but it will take more time than that to decide whether or not the latest rumor about declining chip sales actually impact Apple’s revenue. Cupertino has, several times in the past, cautioned that supply chain sources are not a reliable way to predict demand for its products.