Apple is backing off on plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialise, according to people familiar with the matter.
The Cupertino, California-based electronics maker 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 will aim to produce 90 million handsets for the period, roughly the same level as the prior 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, according to some of the people.
In at least one case, an Apple supplier is moving production capacity from lower-priced iPhones to premium models, they added.
US stock index futures turned lower after the news, with contracts on the Nasdaq 100 falling as much as 1.3 per cent.
Key chipmaker Taiwan Semiconductor Manufacturing fell as much as 1.8 per cent, Apple’s biggest iPhone assembler Hon Hai Precision Industry was down 2.4 per cent and specialised producers Largan Precision and LG Innotek both slumped by more than 7 per cent.
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 per cent boost in orders.
An Apple spokesperson declined to comment.
China, the world’s biggest smartphone market, is in an economic slump that’s hit its domestic mobile device makers and also affected the iPhone’s sales.
Purchases of the iPhone 14 series over its first three days of availability in China were 11 per cent down on its predecessor the previous year, according to a Jefferies note on Monday.
Global demand for personal electronics has also been suppressed by surging inflation, recession fears and disruption from the war in Ukraine. The smartphone market is expected to shrink by 6.5 per cent this year to 1.27 billion units, according to data from market tracker IDC.
“The supply constraints pulling down on the market since last year have eased and the industry has shifted to a demand-constrained market,” said Nabila Popal, research director at IDC.
“High inventory in channels and low demand with no signs of immediate recovery has original equipment manufacturers panicking and cutting their orders drastically for 2022.”
Launch of iPhone 14 at The Dubai Mall - in pictures
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The first customers through the doors of Apple's flagship Dubai Mall store get their hands on the new iPhone 14. All photos by Antonie Robertson / The National -
IT worker Abdul Rafeeque with the new model. -
The new iPhone has had strong reviews for its display, processing power and camera - though some critics say Apple has not given users enough new features to make it worth the upgrade from a 13 model. -
The iPhone 14 Pro Max is the largest phone Apple has released, and is slightly heavier and thicker than the iPhone 13. -
All of Apple's iPhone 14 stock in this store was reserved or sold within 45 minutes. -
Many shoppers arrived before the mall even opened. -
Some customers took the morning off work to queue early on Friday. -
An Apple shop worker shows off the new model. -
Some customers bought several for family and friends, spending tens of thousands of dirhams. -
The launch of the iPhone 14 at the Apple Store in Dubai Mall. -
The new iPhone 14 on display at the Apple Store in Dubai Mall.
