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More Apple indicators? Suppliers cut forecasts

A number of Apple suppliers have warned recently that their quarterly results would likely be below estimates, adding to ongoing concerns about the prospects for Apple's stock.

Wall Street analysts have slashed expectations for iPhone unit sales this quarter through the middle of the year, looking toward an increasingly saturated smartphone market.

Customers browse iPhone 6s smartphones at an Apple Store in Shanghai.
Zhang Peng | LightRocket | Getty Images
Customers browse iPhone 6s smartphones at an Apple Store in Shanghai.

Analog Devices was the latest company to temper its revenue expectations. After the bell on Thursday, the electronic parts company lowered its revenue guidance for its fiscal first quarter, saying expected revenue is now in the range of $745 million to $765 million compared to the company's previous forecast of $805 million to $855 million. Shares of the company declined nearly 3 percent on Friday.

Meanwhile, Apple has kept tumbling. Shares were trading about 4 percent lower on Friday amid concerns over slowing global growth.

Just last week, another key Apple supplier, Cirrus Logic announced preliminary fiscal third-quarter net revenue of approximately $347 million, falling short of the $386 million predicted by analysts at Thomson Reuters. And core technologies and RF solutions company Qorvo trimmed revenue expectations for its fiscal third quarter down to $620 million, versus its original guidance of $720 million to $730 million.

Dialog Semiconductor, also cut its fourth-quarter revenue outlook last month, leading numerous analysts to slash their iPhone unit sales targets. Supply chain checks indicated a 30 percent reduction in production of Apple's iPhone 6S and 6S Plus between January and March, as estimated by the Japanese financial news service Nikkei last week.

"Many different factors are coming together at the same time to hit Apple suppliers. Consumers are not buying iPhones like they have in the past. Also, there is still channel inventory out there that needs to be burned through," said FBR Capital Markets senior analyst Christopher Rolland. "In addition, Apple wants suppliers to make price reductions on their chips, so that will hurt their top line as well."

Apple did not immediately respond to a request for comment from CNBC.

Bucking the trend, Taiwan Semiconductor Manufacturing on Thursday said it would raise capital expenditure by at least 10 percent from 2015's four-year low, partly driven by growth in the global smartphone market. Although, TSMC estimated lower revenue for the current quarter — an off-peak season — compared with three months prior, and said its profit margin would be similar.

The real question is whether this data is included in Wall Street's expectations, Rolland said.

"I would say a very large portion, if not all of it, is well known and already baked into the stock," he said.

— Reuters and CNBC's Anita Balakrishnan contributed to this report.

Disclosure: FBR Capital Markets acts as a market maker for Apple.