Apple asks suppliers to cut deliveries by 20% after slow iPhone X sales
09 Jun 2018
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Apple Inc expects to ship only 80 million new model iPhones this year, down 20 per cent from what it had planned at the same time last year, and has requested suppliers to lower deliveries of products accordingly, the Nikkei reported on Friday citing industry sources.
The Cupertino, California-based firm has asked its parts suppliers to make about 20 per cent fewer components for the three new iPhones it plans to launch in the second half of 2018 compared to last year's plans for its iPhone X and iPhone 8 models, the paper reported.
The report adds to concerns of weakening smartphone sales after years of scorching growth as sales stagnate in key growth markets such as China and users upgrade their phones less often.
The company decided to play it safe in 2018 after overestimating the demand for the $1,000+ iPhone X.
The 2017 iPhones reached 77.31 million shipments for the October-December quarter, when Apple expected numbers close to 100 million, according to GSMArena, whose source revealed the expected numbers for this year are 80 million, or similar to last year's performance.
It knocked 2 per cent off Apple's shares and sent stocks of its suppliers around the world as much as 6 per cent lower, weighing on the US and other stock markets.
"Apple is quite conservative in terms of placing new orders for upcoming iPhones this year," one of the four sources, who is in the supply chain, told the Nikkei Asian Review.
"For the three new models specifically, the total planned capacity could be up to 20 percent fewer than last year's orders."
Top Apple analyst Ming-Chi Kuo said earlier this week that Apple might cut prices of new iPhones to debut later this year by as much as $300, according to several media reports.
Kuo said that Apple is likely to launch a 6.5-inch OLED "IPhone X Plus," a second generation of iPhone X and an iPhone with a 6.1 inch screen.
Apple's stock has added more than $200 billion in the past year, but demand for the iPhone X has underwhelmed investors.
D A Davidson & Co analyst Thomas Forte, however, played down the concerns.
"I am not overly concerned ... about the lower supply speculations. Apple is doing enough in general to keep the ball moving forward," Forte told Reuters.
Shares of Apple suppliers AMS fell 6 per cent, while those of Dialog Semi fell 4.1 pct. US-based suppliers Advanced Micro Devices, Micron Technology Intel, Broadcom Inc and Qualcomm Inc were all down between 1 per cent and 3 per cent.
Apple has so far not responded to requests for comment.
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