Apple Plans to Reduce Production Due to Ukraine Crisis and Rising Inflation
Apple Inc. is planning to lower its production of iPhones and AirPods due to a demand slowdown caused by the ongoing Ukraine crisis and rising inflation, according to a report from the Nikkei newspaper on Monday.
Weaker Demand Forecasts
The company plans to produce 20% fewer iPhone SE units than originally planned next quarter. This translates to around 2-3 million units less than initially anticipated. Additionally, Apple has reduced its 2022 orders for AirPods by more than 10 million units.
Analysts Warn of Challenging Market Conditions
Analysts have been warning that the COVID-19 lockdowns in Chinese cities and a surge in inflation due to the Ukraine conflict could hurt smartphone demand this year. Apple, in particular, faces challenges from the lack of a design upgrade for the latest SE and a $30 price increase from the 2020 model.
Reduced Shipment Estimates
Ming-Chi Kuo at TF International Securities on Monday slashed his shipment estimate for iPhone SE this year to between 15-20 million units, down from the previously anticipated 25-30 million units. Taiwanese analyst Eddie Han from Isaiah Research also cut his forecast sales for the model by 5 million units.
"It looks very similar to the iPhone SE (2020), a second refurbishment of the iPhone 8, and it is even less likely to arouse consumer demand," Han said.
New iPhone Lineup Expected Later This Year
Apple is expected to launch a brand new iPhone lineup later this year. However, analysts say it’s too early to forecast any impact on the upcoming range.
Impact on Apple Shares
Apple’s shares were down by about half a percent in early trading after the news broke. The company has not commented on the matter yet.
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