NEW YORK (BLOOMBERG) - Broadcom, a major Apple supplier, suggested the latest iPhones will be launched later than usual this year.
Hock Tan, chief executive officer of Broadcom, discussed a "major product cycle delay" at a "large North American mobile phone" customer, during an earnings conference call with analysts on Thursday (June 4).
Mr Tan often refers to Apple this way. This time, the executive said the delay will mean the bump in wireless revenue experienced by Broadcom will happen one quarter later than usual this year.
"We are in," Mr Tan said, referring to Broadcom components in the iPhone. "The question is timing."
"This year, we do not expect to see this uptick in revenue until our fourth fiscal quarter," the CEO added. "So accordingly, we expect, our wireless revenue in Q3 will be down sequentially."
Apple is planning to release its next iPhone line multiple weeks later than usual, Bloomberg News previously reported. The company typically unveils its new iPhones in the second half of September, but has occasionally, like in the case of the iPhone X in 2017, launched major new models later in the year.
The delay to the new iPhone release this year is due to the Covid-19 pandemic, which has slowed Apple engineer travel to China to finalize the devices and required employees to mostly work from home in the early months of 2020.
Broadcom's Mr Tan also warned about "supply constraints and an expected substantial reset in wireless" when the company's results came out on Thursday. With much of the world's population confined to their homes, handset demand has dropped.
Broadcom gave a lacklustre forecast, as weak demand for smartphone parts overshadowed rising orders from data centre owners. Revenue in the three months ended in July will be US$5.75 billion, plus or minus US$150 million. That compares with an average analyst prediction of US$5.77 billion, according to data compiled earlier on Thursday by Bloomberg.
The company makes chips that filter radio signals and provide WiFi connections in iPhones and other smartphones. Broadcom is also a key supplier of switch chips, the complex semiconductors that manage data traffic in networking equipment, an area where demand is surging.
"Looking ahead, our third-quarter guidance for semiconductors reflects a surge in demand from cloud, telecom and enterprise customers, offset by supply chain constraints and an expected substantial reset in wireless," Mr Tan said in a statement.
Balancing that weakness in smartphones, orders for chips used in data centre gear have strengthened into the current period, Mr Tan said. Bookings remain "extremely strong" he said. A bright spot for the industry has been the rush to buy equipment by the large cloud-computing providers, who are spending to increase their capacity in an effort to meet a flood of extra traffic caused by the boom in remote work.
Three months ago, Broadcom withdrew its annual sales forecast and gave weak near-term guidance, citing the coronavirus pandemic. Mr Tan said in March that the supply chain hadn't been hurt by the lockdown. Then in April, the company told customers to place orders at least six months ahead of time because of shelter-in-place rules in Malaysia, Thailand, Singapore and the Philippines. That supply chain is now on the mend, he said.
Broadcom, one of the latest to report earnings in the tech sector, is giving an up-to-date view on demand as the economy crumbles in the midst of the pandemic. The stock gained about 1 per cent in extended trading following an initial decline. The shares closed at US$308.89 earlier on Thursday.
