Apple has slashed production for all three iPhone models of 2018, which includes iPhone XS, XS Max and the XR, according to a report in the Wall Street Journal. The report comes after Apple suppliers across the world slashed forecast over lower than expected demand thanks to lowered demand from the Cupertino-technology giant.
According to the report, there is lower than expected demand for Apple’s new iPhones, and “the company’s decision to offer more models created turmoil along its supply chain and made it harder to predict the number of components and handsets it needs.”
The report adds Apple’s decision to slash production across the board has left both executives at suppliers and workers who assemble the devices frustrated.
Apple forecast lower-than-expected sales for the Christmas quarter, which left investors shocked. In its investors earning call for the Q4, 2018 result, Apple’s CFO Luca Maestri had cautioned that going forward the company would have “uncertainty around supply and demand balance,” and are also facing “some macroeconomic uncertainty, particularly in emerging markets.”
Tim Cook had also said that the company was facing pressure in markets like Turkey, India, Brazil and Russia, which have seen their currencies depreciate significantly against the dollar. In India, Apple’s sales have stumbled, particularly in light of the new products which are priced highly. Apple’s iPhone XR starts at Rs 76,900 in India, the iPhone XS at Rs 99,900.
The report notes that Apple’s iPhone XR appears to be the worst hit with the company cutting production plan by up to a third of the nearly 70 million units. Earlier Apple analyst Ming Chi-Kuo had said that Apple had slashed production for the iPhone XR in light of weaker than expected demand.
According to Kuo’s note, which was reported by MacRumors, the estimate went from 100 million to 70 million for fourth quarter 2018 till the third quarter 2019. Kuo had said that customers expected a more affordable price for the iPhone XR, especially given that it had a single rear camera. Other analysts have also indicated that the iPhone XR did not meet sales expectations.
With Apple slashing demand across the board, suppliers have been left scrambling.