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Apple cuts first-quarter production plan for new iPhones by 10 per cent

Apple cuts first-quarter production plan for new iPhones by 10 per cent

Many analysts and consumers have said the new iPhones are overpriced

Tim Cook (Apple)

Tim Cook (Apple)

Credit: Reuters

Apple, which slashed its quarterly sales forecast last week, has reduced planned production for its three new iPhone models by about 10 per cent for the January-March quarter, the Nikkei Asian Review has reported.

That rare forecast cut exposed weakening iPhone demand in China, the world's biggest smartphone market, where a slowing economy has also been buffeted by a trade war with the United States.

Many analysts and consumers have said the new iPhones are overpriced.

Apple asked its suppliers late last month to produce fewer-than-planned units of its XS, XS Max and XR models, the Nikkei reported, citing sources with knowledge of the request.

The request was made before Apple announced its forecast cut, the Nikkei said. The bleaker sales outlook, which Apple attributed to weak China demand, triggered a broad sell-off in global stock markets.

Market research firm Canalys estimates shipments fell 12 per cent in China last year and expects smartphone shipments in 2019 to dip another three per cent, to below 400 million for the first time since 2014.

Overall planned production volume of both old and new iPhones is likely to be cut to a range of 40 million to 43 million units for January-March, from an earlier projection of 47 million to 48 million units, the Nikkei reported, citing one source familiar with the situation.

Apple did not immediately respond to a Reuters request for comment.

The report comes after chip suppliers Samsung and Skyworks Solutions flagged weak first-quarter chip demand for smartphones.

Apple's iPhone suppliers include Taiwanese assemblers Foxconn and Pegatron. Pegatron declined to comment on the report when contacted by Reuters, while Foxconn did not immediately reply to a request for comment.

There was little reaction to the report among shares of major Apple suppliers, as the market has already digested production cuts after the iPhone maker's forecast cut, analysts said.

Shares of Foxconn, the world's biggest electronics contract manufacturer, were up 1.6 per cent while Pegatron was up 1.3 per cent.

Among iPhone component suppliers in Asia, South Korea's LG Display was up 0.5 per cent, while Japan Display was flat.

As Chinese demand has faltered, Apple has increased focus on India, which recently overtook the United States as the world's second-largest smartphone market.

Apple CEO Tim Cook reiterated in an interview with CNBC on Tuesday that India was a major focus for Apple.

Reuters reported last month that Apple will begin assembling its top-end iPhones in India through the local unit of Foxconn this year, citing a person familiar with the matter.

(Reporting by Chris Gallagher and Makiko Yamazaki in TOKYO and Sayantani Ghosh in SINGAPORE; Additional reporting by Jessica Macy Yu in TAIPEI; Editing by Christopher Cushing)

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