Apple's big suppliers look elsewhere for opportunities

Apple Inc's major Chinese suppliers are seeking to redefine their businesses in order to stay profitable in the wake of a 13 percent year-on-year drop in Apple's fiscal 2016 Q2 earnings.

It was the first quarterly drop in 13 years as sales of Apple's iPhones in China slipped 26 percent to $12.49 billion. Apple's third fiscal quarter report will be released next Tuesday.

Lens Technology Co Ltd, which supplies glass covers to Apple, is now cooperating with domestic smartphone brands and tapping into the automobile industry.

It will also speed up technology innovation and R&D investment in wearable devices, intelligent homes and self-driving cars this year.

Shenzhen-based Desay Corporation, which provides more than half of the battery products for Apple's iPhones, has decided to reduce dependence on big customers, and is expanding its business to domestic smartphone makers, such as Xiaomi Corp, Oppo Electronics Corp and vivo Mobile Communication Technology Co Ltd.

Apple's woes were part of a larger trend. The annual growth in smartphone sales is estimated to be in a single digit — 7 percent on 1.5 billion units this year — down more than half from 14.4 percent last year, according to global market consultancy Gartner Inc.

Not very long ago, in 2010, the sales growth rate was a whopping 73 percent. In China, smartphone sales, after growing 16 percent in 2014, were flat last year.

In the January-March period, 349 million smartphones were sold in China, up 3.9 percent year-on-year, according to Gartner.

"In China's saturated yet highly competitive smartphone market, there is little growth expected in the next five years," said Annette Zimmermann, a research director at Gartner.