Upstream component makers have seen weaker-than-expected orders for tablet and wearable products since the early first half and the issue is expected to continue in the second half of the year and will hurt the makers' revenue performances in 2016.
Although the second-generation Apple Watch is estimated to be unveiled in September or October, related supply chain is seeing rather conservative orders for the device.
The Apple Watch, which accounted for nearly 50% of the smartwatch market in the second quarter, has had difficulties providing sufficient profits to its component suppliers, and revenue contributions from its competitors have been far less.
A lack of applications and short battery life have prevented smartwatches from becoming a mainstream product. The smartwatch market, expected to stay small, is unlikely to become a growth driver for component makers as originally expected.
Meanwhile, tablet shipments have been dropping since they peaked at 200 million units in 2014. The tablet market has now reached saturation with devices' lifecycle extended. Cannibalized by 5-inch and larger smartphones and 2-in-1 devices, tablets' weakening sales are impacting the IT supply chain.
With iPad shipments dropping, many of iPad's component suppliers are seeing their profits from related orders decreasing dramatically. As for non-Apple tablets, most component suppliers are not aggressive about landing related orders due to their slim profits.
Article translated by Joseph Tsai
