Morgan Stanley believes Apple's poor iPhone sales results and rising inventory levels are bad news for the industry's chip suppliers.
The smartphone maker reported weaker-than-expected December-quarter iPhone unit sales Thursday. The company also gave a lower-than-expected revenue forecast for the March quarter.
"Disappointing iPhone units combined with an inventory overbuild should continue to have a pronounced impact on Apple suppliers and the smartphone segment more broadly," Morgan Stanley semiconductor analyst Joseph Moore wrote in a note to clients Monday entitled "iPhone weakness is driving a sharp inventory correction." "We remain cautious on Skyworks Solutions, and see some risks to the broader semis cycle."
Moore noted the firm's analysis of Apple's inventory and the company's component inventory it gave to its manufacturing partners. The findings show Apple's total on and off balance sheet inventory rose 41 percent quarter on quarter in the December quarter versus the 12 percent average for the quarter in the previous three years.
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