Reports are showing that the sales for the smartwatch aren’t reaching break-even volume for a supplier.
Media reports are circulating wildly stating that an Apple Watch supplier has not even managed to reach the sales figure required in order to break even, which is stated to have been 2 million units per month.
Advanced Semiconductor Engineering Inc. is indicating that the smartwatches aren’t selling.
The Wall Street Journal reported that the Taiwanese supplier that is responsible for assembling all of the sensors and chips of the Apple Watch into its tiny case (called the system in package, or SiP). A subsidiary of Advanced Semiconductor Engineering (ASE) has told investors that their break even volume is 2 million monthly units, and they have not even been able to reach that level. This, according to a Bernstein research analyst named Mark Li. The subsidiary said that it did not once reach that volume during the second quarter of this year. Moreover, it is not expecting to do so in the third quarter of the year.
This is not promising for the Apple Watch as it is traditionally the third quarter that production becomes busy.
The reason is that producers are typically gearing up for the holiday shopping season when sales will usually spike significantly. However, if this supplier doesn’t expect to hit break-even figures during the months that prepare for the holiday shopping season, then it suggests that the expectations for the sales of the smartwatches are not all that promising. The subsidiary did not say that it expected to reach break-even volumes for the last quarter of the year, but apparently no commitments have been made to suggest that it will, as of yet.
Within a note that was written by Mark Li to Bernstein clients, he found the shortfall in sales of the wearable technology device to be disappointing. He also stated that he’s already had low expectations for the smartwatch, but that even he was very surprised at the fact that it didn’t even manage to reach break-even levels.
This Apple Watch news becomes even more insightful when understanding that companies such as ASE nearly never fail to reach break-even volume, particularly during their third quarter.