"We recently received a request from one of our largest industrial and consumer customers for laser diodes for 3D sensing to materially reduce shipments", Lumentum CEO Alan Lowe said in a statement. Rival Pegatron Corp fell more than 5 percent but later recouped losses.
Among other Apple suppliers, Cirrus Logic Inc. dropped 10 per cent at 9:49 a.m.in NY.
"We think investors should consider Lumentum's updated guide as reflecting as much as a 30% cut in Apple orders", Wells Fargo analyst Aaron Rakers said in a note to clients.
But this Lumentum news is particularly damning because the firm had issued its original financial forecasts just two weeks ago.
"Although Apple has positioned itself as a super-expensive handset maker providing high-end products, its strategy has not been working in emerging markets including China and India as Chinese vendors have been making iPhone-like products", he said.
Shares in major Apple suppliers slumped sharply on Monday amid continued concern that Apple is reducing production levels of its iPhones amid a slowdown in sales.
The world's largest contract chipmaker, Taiwan Semiconductor Manufacturing Co, fell 2.6 percent, while Flexium Interconnect Inc was down 1.5 percent.
Taiwan-based assembler Hon Hai Precision Industry Co Ltd (Foxconn) dropped more than 3 percent. Shares in Cirrus Logic dropped 10pc and Qorvo stock slipped 7pc.
"Apple could have accumulated too much Lumentum inventory, and needs to work it off, in which case the unit shortfall is less, although it is still indicative of weak iPhone sales".
Apple also stoked worries about iPhone sales earlier this month when it said that beginning this quarter, it will no longer break down unit sales for iPhones, iPads and Macs. Investors interpreted the news as cut in orders from Apple, which would jibe with the new iPhone 7 and 8 demand forecasts because those models don't use Face ID.
JP Morgan analysts weighed in by cutting their price target for Apple by $4 to $270 pointing to poor orders for the new iPhone XR. Last week, Skyworks gave a first-quarter outlook that missed expectations because of smartphone weakness, prompting at least two other downgrades.