Apple shares fell to their lowest in more than three months on Monday as three suppliers issued warnings on results that pointed to weakness in iPhone sales.
The Cupertino, California's signature product has become pricier with every new launch and analysts say that consumers, especially in emerging markets such as India, are ditching them for cheaper alternatives like those offered by China's OnePlus.
Apple warned earlier this month that holiday sales would miss Wall Street expectations, blaming the fall on weakness in emerging markets and foreign exchange costs.
Lumentum Holdings, the main supplier of the Face ID technology in the latest generation of iPhones, cut US$70 million off its forecasts for revenue on Monday, knocking another five per cent, or around US$50 billion, off Apple's value in morning trade on Wall Street.
"Many suppliers have lowered numbers because of their unnamed 'largest customer,' which is Apple. Apple got cautious in their guidance and it's hitting their suppliers," Elazar Capital analyst Chaim Siegel said.
Lumentum blamed the cut in numbers it gave originally just 12 days ago on a client that was "one of our largest... for laser diodes for 3D sensing", which analysts said could only be Apple.
Screen maker Japan Display cited lower smartphone demand in cutting its own outlook, while British chipmaker IQE said lower orders from a major customer would reduce its results for this year.
Shares in Lumentum fell nearly 30 per cent, dragging down shares of other suppliers and chipmakers.
JP Morgan analysts weighed in by cutting their price target for Apple by US$4 to US$270 pointing to poor orders for the new iPhone XR.
Three analysts said that Lumentum's forecast pointed to a reduction of 18 million to 20 million iPhones on earlier estimates, based on average selling prices for 3D sensing parts.
"Apple could have accumulated too much Lumentum inventory, and needs to work it off, in which case the unit shortfall is less, although it is still indicative of weak iPhone sales." D.A. Davidson analyst Mark Kelleher said.
In the fourth quarter, Apple sold 46.9 million iPhones, missing analyst expectations of 47.5 million iPhones, according to FactSet.
Japan's Nikkei reported earlier this month that Apple had told its smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the iPhone XR, the cheapest of this year's new launches.
Longbow Research analysts said spot checks with Apple's Taiwanese suppliers late last week highlighted 20 per cent to 30 per cent iPhone order cuts related mainly to iPhone XR and XS Max, and 20 per cent to 25 per cent order increases for older iPhone models.
Apple started selling iPhone XS and XS Max in September and XR model last month. Lumentum's chips are not used in phones older than last year's iPhone X.
(Reporting by Vibhuti Sharma and Shanti S Nair in Bengaluru; Editing by Anil D'Silva and Patrick Graham)