Apple Loses iPhone Production Increase Due to Falling Demand

After a predicted uptick in demand for the new iPhone failed to materialize, Apple Inc. has decided against increasing production this year, according to people familiar with the matter.

The people, who asked not to be identified because the company’s plans are private, said that the Cupertino, California-based electronics maker has told suppliers to pull back from efforts to increase the assembly of the iPhone 14 product family by as much as 6 million units in the second half of this year.

People familiar with the matter say that Apple will aim to produce 90 million handsets for the period, which is about the same as the prior year and in line with Apple’s original forecast this summer.

Some people claim that the demand for the more expensive iPhone 14 Pro models is higher than that of, the more affordable models. They said that at least one Apple supplier was shifting production away from cheaper iPhones to more expensive premium models.

At the opening of trading on Wednesday in New York, Apple shares had dropped 3.9% to $145.90. The index has fallen 23% this year, while the stakes are down only 18%.

According to analysts at Morgan Stanley and Odds, the news did not suggest a decrease in volume. As a result, Anurag Rana, a senior analyst at Bloomberg Intelligence, said he “was not surprised” by the report and still “believes that weak demand from Europe and China could hurt overall iPhone sales in fiscal 2023.”

There was a widespread selloff of electronics suppliers in Taipei, with major companies like Taiwan Semiconductor Manufacturing Co. (a significant chip manufacturer) and Apple’s largest iPhone assembler, Hon Hai Precision Industry Co. (a major electronics component manufacturer), both falling over 3%.

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In Amsterdam, shares of ASML Holding NV, a manufacturer of high-tech equipment used in chip production, fell by as much as 3.2 percent. In the wake of rumors that Apple will abandon its plans to increase iPhone production, the company’s suppliers have taken a hit.

In the weeks following the release of the iPhone 14, Apple raised its sales forecast, and some of its suppliers began preparing for an increase in orders of 7%. A representative from Apple said they couldn’t comment.

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Even though it has the largest smartphone market, China’s current economic downturn has hurt sales of the iPhone and other foreign brands made in China. A Jefferies note published on Monday revealed that sales of the iPhone 14 series in China were 11% lower in the first three days compared to last year.

Inflation at record highs, recession worries, and disruptions caused by the conflict in Ukraine have all contributed to a global drop in demand for consumer electronics. According to market research firm IDC, smartphone sales are predicted to drop 6.5% this year, to 1.27 billion units.

According to Nabila Popal, IDC’s research director, “the supply constraints pulling down on the market since last year have eased, and the industry has shifted to a demand-constrained market.” OEMs have panicked and drastically reduced orders for 2022 due to high channel inventory and low demand showing no immediate recovery.