TOKYO -- Six of Japan's top electronic parts manufacturers have lowered their annual profit forecasts by the biggest margin in five years as slowing smartphone demand forces them to seek growth elsewhere, notably in autos.
Kyocera, Nidec, TDK, MinebeaMitsumi, Alps Alpine and Nitto Denko -- all links in Apple's vast supply chain -- have cut a total of more than 120 billion yen ($1.09 billion) off their operating profit forecasts for the year ending March 31.
The latest downgrade came on Wednesday, when MinebeaMitsumi said it now expects operating profit to rise 9% to 75 billion yen, 10 billion yen lower than forecast earlier.
The Tokyo-based company has strength in bearings but derives 80% of its sales from electronic components like motors used in video game devices and image stabilizers for smartphone cameras. It anticipates a slowdown in smartphone demand and an inventory correction for video game consoles in the current quarter, Executive Officer Satoshi Yoneda said.
With inventories coming down and new smartphone models stirring up fresh consumer demand, few in the industry expect sales to sink further. Demand will likely start recovering in April, Yoneda said.
But some analysts call the companies' outlooks too optimistic, especially with China's economy threatening to slow further.
The ability to reduce reliance on smartphones, which have proved a source of earnings volatility in recent years, looks likely to create further divergence in the sector's earnings performance.
Capacitor maker Murata Manufacturing, which did not lower its annual profit forecast, sees demand for automotive parts -- like sensors that monitor tire pressure -- rising even as sales of smartphone-related components slow. "We have a growing backlog of orders," Executive Vice President Yoshito Takemura said.
TDK downgraded its forecast but expects a still-healthy 23% rise in operating profit, driven by growth in the auto parts business, which includes sensors and components for electric-vehicle batteries.
Including Rohm, which also did not cut its annual forecast, operating profit at the eight manufacturers rose 4% on the year in the nine months ended in December. But profit tumbled 15% in the October-December quarter as a slowing Chinese economy and the U.S.-China trade war undercut sales.
December orders at TDK were 30% below the monthly average for the July-September term, Senior Vice President Tetsuji Yamanishi said.