Apple’s sole A10 chip supplier for the forthcoming iPhone 7, Taiwan Semiconductor Manufacturing Company (TSMC), will likely see a shrink in chip shipments in the second half of this year, as the demand for the device will be weak, a source from the company has told Japanese news outlet, Nikkei.
TSMC will likely see shipments shrink to 70% to 80% of the level reached in the second half of 2015, the source said. That’s rather interesting, as the A9 chips powering the iPhone 6s and 6s Plus are supplied by both TSMC and its rival, Samsung.
The Nikkei report also cites Jason Cheng, CEO of key iPhone assembly partner Pegatron, who said that the second half of this year looks better than the first half, but they are “still cautious due to some unfavorable uncertainties.”
The main reasons cited for the grim outlook for Apple’s supplier are a lack of groundbreaking features and low demand for the iPhone 7, which will likely be launched this fall. Nikkei cites a person at a major Taiwanese Apple supplier as saying that the “iPhone 7’s lack of innovation is to be blamed for the weak demand,” which is rather interesting, since the device hasn’t even been launched yet.
The report of weak demand adds to negative reports about iPhone demand vanishing, as Apple posted its first decline in smartphone shipments and profits. Nikkei’s survey of brokerages found that Apple will likely ship slightly more than 200 million iPhones this year, down from 230 million sold in 2015.