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[http://com.ft.imagepublish.upp-prod-eu.s3.amazonaws.com/27af72e8-efc4-11e5-aff5-19b4e253664a] © BloombergThe slowdown of iPhone sales at Apple rippled across the group’s supply chain, as the Japanese companies whose products are used in smartphones reported stalling and declining growth on Thursday. Sony said that growth in one of its strongest businesses, image sensors used in smartphone cameras, came to a sudden halt in the first three months of this year. Fanuc, which sells machine tools to make metal cases for iPhones, and Murata Manufacturing, whose biggest customer is Apple, both projected double-digit declines in profits for the current financial year. The grim figures came after Apple reported its first revenue decline in 13 years this week, resulting in the first fall in sales for the iPhone. Tim Cook, Apple chief executive, blamed a slowdown in the smartphone market on temporary macroeconomic weakness. But suppliers across Asia are already taking steps to reduce their reliance on the US company by expanding into the car sector and tapping into demand from Chinese smartphone makers. “We will build our business with the premise that the smartphone market has entered a phase of low growth,” said Kenichiro Yoshida, Sony’s chief financial officer. For the fiscal fourth quarter through March, the Japanese technology and entertainment group booked a net loss of ¥88.3bn ($817m) because of the deterioration of its devices division, which produces CMOS sensors used in iPhone cameras and camera modules. The image sensor business barely eked out a profit during the period as sales volume dropped and costs increased from operating plants at low capacity. The pullback is a blow for Sony which has counted on smartphone components to drive growth as it pulls back from consumer electronics businesses. “We had positioned image sensors as a pillar of our growth story so we take the deterioration in this business very seriously,” Mr Yoshida said. The company does not expect a recovery in image sensor demand until the second half of the 2016-17 fiscal year. Atul Goyal, an analyst at Jefferies, expects the recovery in camera modules to be driven by demand from Chinese clients and possible adoption of dual cameras when Apple eventually upgrades the iPhone. Sony has delayed the release of its full-year guidance until May 24 as it assesses the impact from a halt in production of image sensors caused by the twin earthquakes on the southern island of Kyushu. The Kumamoto facility mainly makes components for digital cameras and surveillance equipment. Assuming Sony loses three months’ worth of sales from the plant, Citigroup estimates an impact of ¥17bn on operating profit. The group still managed to report its first full-year net profit in three years as strong sales of PlayStation 4 games console and its entertainment businesses helped to offset the weakness of image sensors. Earlier on Thursday, Murata Manufacturing, which makes components for smartphones, said it expected its net profit for the 2016-2017 year to drop 13 per cent to ¥178bn. Shares in Fanuc declined 9.9 per cent a day after it surprised investors with a guidance for a 41 per cent decline in annual net profit. In addition to a slowdown in the smartphone market, both manufacturers expect negative impact from a stronger yen given that their core productions are carried out in Japan.

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