In what could be evidence that Apple is bracing for even worse demand for its iPhones, the Cupertino, California company has reportedly slashed production for new iPhones by roughly 10 percent.
The Nikkei Asian Review, citing sources familiar with the matter, reported Apple is cutting production by around 10 percent for the coming three months. Sources told the paper Apple reached out to suppliers in late December about the production cuts for the first quarter of 2019. The paper noted it is the second time in the past two months that Apple has scaled back production of new iPhones. According to the report, Apple made the request before it issued an earnings warning in the early part of January. At the time, it said revenue for the last quarter of 2018 would be around $84 billion, below its past guidance for revenue of between $89 billion and $93 billion.
The most recent production cuts are being applied across the board to all of Apple’s new iPhone models, which it launched in September. One supplier told The Nikkei Asian Review that level of the revisions depends on the supplier and the product mix of that supplier. Another source told the paper that planned production volume on Apple’s old and new iPhones is being cut to around 40 to 43 million units, lower than the past projection for production of 47 million to 48 million iPhones in the January through March period. If it holds true, it would be a more than 20 percent decline in the number of iPhone sold in the year-ago first quarter. When Apple issued its warning, the company cited the trade war between the U.S. and China and a smartphone market that is getting saturated for the lackluster demand.
But it’s not just Apple that is suffering. The report noted that Apple’s woes are impacting the iPhone supply chain, with Largan Precision, an iPhone camera lens provider, saying earlier in January that sales declined 34 percent in December and that it had the worst December in terms of sales since 2013. Meanwhile, Catcher Technology, which makes a metal case for smartphones, said this week that it expects sales in the January through March quarter to be lower than a year ago, according to the report.