TAIPEI -- Two major suppliers to Apple, Huawei Technologies and Samsung Electronics said on Thursday that demand for smartphones look sluggish going into the all-important Christmas season, with one of them citing the snowballing trade tensions between the world's two largest economies.
Their warnings, the first from members of the supply chain, add to the pessimism in the already slowing smartphone industry ahead of what is normally their busiest time of year.
"The outlook for this quarter is weak for Android and non-Android smartphones," Warren Chen, CEO of charger supplier Lite-On Technology, told the Nikkei Asian Review on the sidelines of an industry association event in Taipei. "The trade war waged by U.S. President Donald Trump is making a matured smartphone market even more conservative."
Adam Lin, chief executive of lens maker Largan Precision, said "October sales will be slightly softer than September, and November sales would be significantly weaker than October."
"We are seeing most of our customers across the board all revising down in the near term," Lin told investors and reporters on Thursday in an online briefing, though he did not specify the scale of the slowing demand.
Asian electronics stocks suffered one of their steepest declines in months on Thursday following a major sell-off in the U.S. market that hit tech shares hard. Largan plunged the daily limit of 10%, while Lite-On slumped 8.45%.
Other smartphone-related companies such as casing maker Catcher Technology, touch module provider General Interface Solution and iPhone assembler Pegatron all fell close to the daily limit of 10%.
"The overall smartphone industry is expected to face a difficult season this quarter, given the latest message delivered by Largan's executive," said Nicole Tu, a tech analyst at Yuanta Securities Investment Consulting.
Largan, headquartered in the central Taiwanese city of Taichung, supplies camera lenses to top customer Apple and also offers high-end lenses for smartphones from Huawei, Oppo, Vivo and Samsung. Lite-On, based in Taipei, is the key supplier of chargers and components for iPhones and Android smartphones.
Largan's Lin did not address the demand outlook after December, calling it unclear.
The bearish remarks come just weeks after Apple, the world's most profitable smartphone company, rolled out its premium iPhone Xs and iPhone Xs Max. The U.S. tech company's more affordable iPhone XR model hits the market later this month, and CEO Tim Cook is visiting Beijing to promote the opening of the third Apple store in the Chinese capital.
China's Huawei, which surpassed Apple to become the second-largest smartphone company by shipments during the April-June quarter, releases its latest premium handset Mate 20 series next Tuesday in London. Global shipment leader Samsung of South Korea unveils more details about its first foldable smartphone next month.
The guidance from the camera lens maker dampened the outlook for the Chinese smartphone market as well, she said, noting that the world's largest smartphone market ceased its fast growth in the past year.
When asked whether Largan will seek more orders from non-Chinese smartphone clients to dodge any potential damage from the U.S.-China trade war, Lin said the company will take orders from any clients as long as the prices are reasonable.
Despite lackluster demand in the coming months, Largan still intends to expand capacity in Taiwan next year, he said.
