Apple Inc (NASDAQ:AAPL) is reportedly reversing plans to hike production of its new iPhones after an anticipated uptick in demand failed to materialise.
The California-based electronics giant has told suppliers to slash production by as much as 6mln units in the second half of 2022, according to a Bloomberg report citing people familiar with the matter.
Apple will now aim to produce 90mln handsets over the six-month period, similar to the level in the prior year and in-line with a previous prediction.
This sent shares in Apple down 3% in pre-market trading and also hit the stock of its suppliers on Wednesday afternoon.
Apple had previously upped its revenue projections in the weeks leading up to the release, with some of the suppliers readying for a 7% rise in orders.
In the world’s largest smartphone market – China – an economic downturn has hit Apple’s mobile makers and heavily affected iPhone sales, with purchases of the iPhone 14 models down 11% in the first three days compared with its predecessor the prior year, analysts at Jeffries noted.
Apple makes iPhone 14 in India to accelerate production shift from China
Global demand for electronics has dropped amid soaring inflation, worldwide recession fears and supply shortages due to the Ukraine war, while the smartphone market will shrink around 6.5% this year to 1.27bn units, according to market tracker IDC.
Nabila Popal, IDC research director, commented: “The supply constraints pulling down on the market since last year have eased and the industry has shifted to a demand-constrained market.
“High inventory in channels and low demand with no signs of immediate recovery has OEMs panicking and cutting their orders drastically for 2022.”