More bad news has emerged after The Nikkei Asian Review cited sources claiming Apple is to cut the global production of iPhones by 10% for the first quarter of the year.
Sources told the paper that Apple had contacted its suppliers in late December concerning production cuts. This is the second time in the last two months that Apple had decided to scale-back on production of new iPhones.
The second round of cuts are being applied to all of Apple’s new iPhone models, which were launched last September. One source told the paper that planned production is being reduced to around 40 to 43 million units. This is significantly lower than past production of 47 and 48 million in the previous first quarter.
If this is true, then Apple are looking at a 20% cut in global production. In its recent profits warning Apple cited the ongoing trade war between the US and China as the principal cause as well as the general stagnation of the smartphone market.
Apple is cutting its current production plan for new iPhones by about 10% for the next three months in a sign that the U.S. smartphone maker is expecting a further hit this year, just a week after its market-shaking revelation that it would miss revenue forecasts at the end of 2018.
Apple late last month asked its suppliers to produce fewer of its new iPhones than planned for the January-March quarter, sources with knowledge of the request told the Nikkei Asian Review. It is the second time in two months that the U.S. company has trimmed its planned production for the flagship device.- Cheng Ting-Fang & Lauly Li: Nikkei Asian Review
As well as cutting back on production Apple has also been involved in price slashing on its iPhones. In particular, the distributor price offered to networks in China.
According to sources this should allow the networks to offer higher subsidies without Apple having to lower the price in its stores. It is not clear at present whether this practice will be extended to other countries.
And its not just Apple suffering. Apple’s woes are beginning to impact on the iPhone supply chain. For instance, a company called Largan Precision, which supplies iPhone camera lens said that their sales had fallen by 34% last month.
Another, Catcher Technology, which makes the metal cases for smartphones said sales had fallen dramatically since last year following Apple’s poor returns.
Image: Blake Patterson