Apple Inc, which is affected by a global supply crunch, is now confronting a different problem: slowing demand.
The company has told its component suppliers that demand for the iPhone 13 series has weakened, people familiar with the matter said, signaling that some consumers have decided against trying to get the hard-to-find item.
Already, Apple had cut its iPhone 13 production goal for this year by as many as 10 million units, down from a target of 90 million, because of a lack of parts, Bloomberg reported earlier.
Photo: Reuters
However, the hope was to make up much of that shortfall next year — when supply is expected to improve.
The company is now informing its vendors that those orders might not materialize, said the people, who asked not to be identified because the discussions are private.
The company is still on track for a record holiday season, with analysts projecting a sales increase of 6 percent to US$117.9 billion in the final three months of this year.
However, it would not be the blockbuster quarter that Apple — and Wall Street — had originally envisioned.
Shortages and delivery delays have frustrated many consumers, and with inflation and the Omicron variant of SARS-CoV-2 bringing fresh concerns to COVID-19 pandemic-weary shoppers, they might forego some purchases.
That could mean skipping the iPhone 13 altogether and waiting to upgrade next year, when its successor comes out.
The current lineup, which starts at US$799 for the standard model and US$999 for the Pro, is considered a modest update from the iPhone 12, which had a whole new design.
Bigger changes are expected for next year’s model, giving some shoppers a reason to wait.
Apple, based in Cupertino, California, declined to comment.
Asian Apple suppliers extended their declines after Bloomberg’s report.
In South Korea, shares of LG Innotek Co slid 11 percent, while Hong Kong-listed AAC Technologies Holdings Inc’s (瑞聲科技) shares fell as much as 4.8 percent and Japan’s TDK Corp’s shares dropped as much as 4.8 percent.
The iPhone is Apple’s flagship product, accounting for about half of its US$365.8 billion in revenue in the last fiscal year.
During the company’s last earnings call in October, chief executive officer Tim Cook said that demand for new products was “very robust” — fueled by interest in the latest iPhones, iPads and other devices — and that the company was on track for a record holiday quarter.
It had sales of US$111.4 billion in the year-earlier period.
Cook pointed to supply constraints as the company’s biggest challenge and predicted that the struggle to get enough components, particularly chips, would cost Apple more than US$6 billion in revenue during the holiday quarter.
The constraints have hurt Apple partners as well.
Sales for the company’s main chip supplier, Taiwan Semiconductor Manufacturing Co (台積電), has weakened, with October revenue falling 12 percent from the previous month to NT$134.5 billion (US$4.84 billion).
Last month, Apple’s main iPhone assembler, Hon Hai Precision Industry Co (鴻海精密), predicted that its business would shrink this quarter from a year earlier — caused by declines in consumer electronics and computing — as it continues to be affected by the chip shortage.
There is also more strain on shoppers’ pocketbooks.
US consumer prices last rose month at the fastest annual pace since 1990.
Surging costs for food, gas and housing are eroding purchasing power, despite stronger wage growth.
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