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Weakness Continues to Plague Apple’s iPhone Sales

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Apple cuts iPhone production again

As per the latest report by the Nikkei Asian Review on January 9, Apple (AAPL) is cutting the production of its latest iPhone models by ~10% in the first quarter due to sluggish iPhone sales. The recent cut in iPhone production comes within two months of the iPhone maker telling its suppliers to produce fewer-than-expected iPhones for the March quarter.

Soft demand for the latest iPhone models has led the company’s suppliers, including Lumentum Holdings (LITE), Qorvo (QRVO), Universal Display, Cirrus Logic (CRUS), and Skyworks Solutions (SWKS), to cut their sales outlooks.

Apple’s iPhone sales weakness was also reflected in the reduction of its sales guidance, which it announced last week. Apart from the soft iPhone sales expected in Greater China, Apple expects the weakening Chinese economy to further dent iPhone sales.

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Lower demand for Apple’s newest iPhones

The company’s trimmed-down production plan for its smartphones—including its new iPhone models the XS Max, XS, and XR—signals that its new models aren’t seeing robust demand. Reportedly, the company’s planned production volumes for new and old iPhones will now be ~40 million–43 million units for the first quarter, down from the earlier forecast of 47 million–48 million units.

Apple has been witnessing sluggish demand for its iPhones, which are a crucial driver of its revenue. The company also missed its iPhone shipment estimate on November 1. It reported iPhone unit shipments of 46.9 million in the fourth quarter of fiscal 2018, down from analysts’ expectation of 47.5 million units.

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