By Emily Bary
David Paul Morris/Bloomberg
After Apple Inc. announced in February that it wouldn’t hit its prior revenue forecast due to coronavirus impacts, there have been mixed messages throughout the company’s supply chain.
Some companies, like ON Semiconductor Corp. /zigman2/quotes/202641012/composite ON +0.89% and Skyworks Solutions Inc. /zigman2/quotes/201417573/composite SWKS +2.07% , proceeded to yank or negatively revise their own outlooks, while others, including Analog Devices Inc. /zigman2/quotes/201631938/composite ADI +0.71% , left their forecasts unchanged.
For Apple /zigman2/quotes/202934861/composite AAPL +3.75% , the outbreak of the COVID-19 disease brought on by the novel coronavirus presents supply and demand risks. Store closures and reduced travel could impact customer willingness to purchase new Apple devices, while worker shortages and factory shutdowns pose manufacturing issues.
Read: What Apple, Microsoft, GE and other U.S. companies are saying about the coronavirus outbreak
Apple disclosed on Feb. 17 that it no longer expects to meet its quarterly revenue forecast of $63 billion to $67 billion due to the outbreak, but Chief Executive Tim Cook hinted at improving supply conditions on a recent television appearance. He told Fox Business in late February that factories in China are now “in ramp” as the coronavirus situation starts to improve in the country.
Drawing from Apple’s annual list of top suppliers, here is a sampling of what its partners have disclosed in recent weeks.
Advanced Micro Devices Inc. /zigman2/quotes/208144392/composite AMD +2.95% kept its forecast unchanged during a Thursday investor day, though the company expects revenue to fall toward the lower end of that prior outlook, which called for first-quarter sales of $1.8 billion at the midpoint.
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Amphenol /zigman2/quotes/207999687/composite APH +1.41% , a maker of sensors and connectors, told investors on Feb. 24 that it didn’t expect to meet its prior forecast “given the uncertainty around the timing of a return to full production in China and the lack of visibility with respect to demand from customers in China.”
Analog Devices reported results Feb. 19 and disclosed that it expected a $70 million negative revenue impact from the virus. Speaking earlier this week at a Raymond James conference, Chief Financial Officer Prashanth Mahendra-Rajah declined to talk about business trends in the weeks since the last earnings report, though he said that the company is “comfortable with the guidance that we put out there.”
The chairman of Foxconn Technology Group, which assembles devices for Apple, remarked earlier this week that the company expects its factories to return to their seasonal levels in March if the outbreak doesn’t get worse, according to a Wall Street Journal report . One problem the company had faced was a limited workforce, as some employees were subject to lockdowns and couldn’t make it to work as China attempted to control the spread of the virus.
“There has been an increasing flow of more constructive news regarding Foxconn’s factory utilization ramps through the month of March that leads us to believe that supply constraints should ease this month,” Deutsche Bank analyst Jeriel Ong wrote Thursday. Various data points suggest to him that “iPhone channel inventories are likely depressed versus their normal five-to-seven week frameworks, but are not yet exhausted.”
Executives from circuit maker Maxim Integrated Products Inc. /zigman2/quotes/201861354/composite MXIM +0.88% met with Morgan Stanley analyst Joseph Moore earlier in the week, but the company isn’t adjusting its forecast to account for the coronavirus.
“The company acknowledges increased uncertainty and the potential for disruption,” Moore wrote in a summary of the conversation. “That said, Maxim highlighted that outside of optical and [battery management solutions], it has less exposure to Chinese [original equipment manufacturers] and also has no manufacturing footprint (front end or back end).”
Microchip Technology Inc. /zigman2/quotes/208326291/composite MCHP +1.33% yanked its earnings outlook Monday, citing “very weak demand in Asia, especially in China, driven by the COVID-19 fears, and customers returning to work at a slower pace than anticipated.”
NXP Semiconductors NV /zigman2/quotes/202999625/composite NXPI +0.56% reduced its revenue forecast by $50 million to $150, also on Monday. The company saw the weakest activity around the extended Lunar New Year period but has observed “more normal order levels” in the past two weeks.
ON Semiconductor on Friday lowered its revenue outlook to $1.275 billion to $1.325 billion, down from an earlier range of $1.355 billion to $1.405 billion. “We saw soft order trends in China in the weeks following Lunar New Year holidays, but orders have since picked up, and we have not seen any significant cancellations of orders,” Chief Executive Keith Jackson said in a release.
Fellow supplier Qorvo Inc. /zigman2/quotes/209919828/composite QRVO +0.51% became yet another chip company to cut its outlook Tuesday. The company is now modeling $770 million in fiscal fourth-quarter revenue, down from an earlier forecast of $800 million to $840 million.
Skyworks Solutions, based in California, lowered its revenue and earnings forecast Wednesday, as the company now expects fiscal second-quarter revenue of $760 million to $770 million, below a prior outlook of $800 million to $820 million. The company is also calling for adjusted earnings per share of $1.34 at the midpoint its new revenue range, compared to its earlier projection of $1.46 at the midpoint of the old range.
“Although COVID-19 has caused no significant disruption within Skyworks’ manufacturing operations to date, the current demand environment for our products has been negatively impacted by interruptions in global supply chains,” Chief Executive Liam Griffin said in the release.