Apple Inc is backing off plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize, people familiar with the matter said.
The Cupertino, California-based company has told suppliers to pull back from efforts to increase assembly of the iPhone 14 product family by as many as 6 million units in the second half of this year, said the people, asking not to be named as the plans are not public.
Instead, the company would aim to produce 90 million handsets for the period, about the same level as in the second half of last year and in line with Apple’s original forecast this summer, the people said.
Demand for higher-priced iPhone 14 Pro models is stronger than for the entry-level versions, some of the people said.
In at least one case, an Apple supplier is shifting production capacity from lower-priced iPhones to premium models, they added.
Apple shares fell as much as 3.3 percent in premarket trading yesterday.
US stock index futures also turned lower after the news, with contracts on the NASDAQ 100 down as much as 1.5 percent.
In Taipei, key chip supplier Taiwan Semiconductor Manufacturing Co (台積電) fell 2.2 percent and Apple’s biggest iPhone assembler, Hon Hai Precision Industry Co (鴻海精密), was down 2.9 percent, amid a wide selloff of electronics suppliers.
ASML Holding NV, maker of advanced chipmaking gear, dropped as much as 3.2 percent in Amsterdam.
Apple had upgraded its sales projections in the weeks leading up to the iPhone 14 release, and some of its suppliers had started making preparations for a 7 percent boost in orders.
An Apple spokesperson declined to comment.
China, the world’s biggest smartphone market, is in an economic slump that has hit its domestic mobile device makers and also affected iPhone sales.
Purchases of the iPhone 14 series over its first three days of availability in China were 11 percent down on its predecessor, launched last year, a Jefferies note said on Monday.
Global demand for personal electronics has also been suppressed by surging inflation, recession fears and disruption from Russia’s war in Ukraine.
The global smartphone market is projected to shrink 6.5 percent this year to 1.27 billion units, data from market tracker International Data Corp (IDC) showed.
“The supply constraints pulling down on the market since last year have eased and the industry has shifted to a demand-constrained market,” IDC research director Nabila Popal said.
“High inventory in channels and low demand with no signs of immediate recovery has OEMs [original equipment manufacturers] panicking and cutting their orders drastically for 2022,” Popal added.
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