Slumping demand, surging inflation and supply chain disruptions are triggering production cuts in key Apple products, Nikkei reported Monday.
Apple (AAPL) – Get Apple Inc. Report shares slumped lower Monday following a report from the Nikkei business newspaper that suggested the world’s biggest tech company is planning to cut some of its iPhone production rates.
Slowing demand, surging inflation and supply chain disruptions have combined to trigger a potential 20% cut in iPhone SE production, Nikkei reported, a level that translates to between 2 million and 3 million units next quarter.
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Cuts in the low-cost 5G enabled smartphone, which was unveiled only weeks ago, will also be paired with a 10 million unit reduction in AirPod production and a trimming of units for the new iPhone 13 suite of handsets, Nikkei reported.
Apple shares were marked 1.9% lower in pre-market trading to indicate an opening bell price of $171.35 each, a move that would extend the stock’s year-to-date decline to around 5.75%.
Apple told investors in late January that, “given the continued uncertainty around the world in the near term, we are not providing revenue guidance” but said March quarter sales would likely decelerate from their December period growth rate of 11.2%.
CEO Tim Cook told investors in late January that the group was seeing “strong demand across the iPhone 13 family”, including several top-selling models in various markets around the world, adding that “we feel quite good about the momentum of iPhone”, even amid supply-chain constraints.
Earlier this month, Apple’s biggest and most important production partner — the world’s biggest electronics manufacturer — cautioned it may not have certainty on supply chain disruptions until later in the year.
Foxconn said that while it was “cautiously positive” on sales for the coming year, it expected flat revenues from its smartphone segment owing to supply chain uncertainty and the impact of Covid infections and shutdowns in the Asia region.
