Reports of Reduced Component Orders Fuel Speculation Over Dismal iPhone XS/XR Sales

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Apple’s No. 1 TrueDepth camera component supplier, Lumentum, on Tuesday dropped the bombshell revelation that one of its biggest customers recently requested a significant reduction to its previous component order — news which sent the company’s stock (LITE.O) tumbling 28 percent during early Tuesday trading, according to a Reuters report.

While the VCSEL-maker stopped short of identifying the customer by name, speculation among news organizations (including Reuters) is that Lumentum’s referring to Apple — whose iPhone X, XS/XS Max, XR and 2018 iPad Pro models all boast camera equipment that relies on the firm’s advanced 3D imaging technology.

“We recently received a request from one of our largest Industrial and Consumer customers for laser diodes for 3D sensing to materially reduce shipments to them during our fiscal second quarter for previously placed orders that were originally scheduled for delivery during the quarter,” said Alan Lowe, Lumentum’s President and CEO, in a statement, adding that “With our proven ability to deliver high volumes, years of experience, hundreds of millions of devices in the field, and new product and customer funnel, we remain confident in our leadership position in the nascent market for laser diodes for 3D sensing.”

Today’s news interestingly comes right off the heels of a report in which the well-connected Apple analyst, Ming-Chi Kuo, noted a sharp reduction of 10 million units to his previous iPhone XR shipment estimates — further adding to the probability that Cupertino is the customer who got away.

Of course, many other firms including mainland China’s No. 1 smartphone OEM, Huawei, are also among Lumentum’s most significant commercial customers. But, given the Asian phone makers increasing interest in display-embedded biometric sensors — vis á vis, advanced 3D camera systems — Apple is almost certainly the focus of speculation in today’s report.

Even the tech giant’s CEO, in comments made earlier this month, cautioned that iPhone sales during the historically-busy holiday quarter will probably fall short of Wall Street expectations, chalking the stagnation up to little more than “weakness in emerging markets and foreign exchange costs,” among other economic factors.

Perhaps most ironic of all, though, is that while Apple may have reduced TrueDepth camera component orders amid a more dismal than expected iPhone XS, XS Max and XR sales outlook, the company is reportedly increasing orders for its older iPhone 7 and iPhone 8 devices, suggesting that a larger number of would-be customers are opting to shell out the least amount of cash for a new iPhone upgrades this year.

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