Weak demand for iPhone 14 series: Apple cuts production increase plans
Apple launched the iPhone 14 series earlier this month, and they are already available worldwide. The iPhone 14 Pro and iPhone 14 Pro Max are significant upgrades over their predecessors, thanks to a large 48MP camera, a new Dynamic Island layout on the front, and an A16 SoC. However, it looks like demand for the latest iPhone may not be what Apple expected. The company is abandoning plans to ramp up production of new iPhones this year after an expected surge in demand failed to materialize, according to a report by Bloomberg.
The Cupertino tech giant has told suppliers to reduce assembly of the iPhone 14 series by as much as 6 million units in the second half of the year, according to people familiar with the matter. Apple is targeting just 90 million units for the period, roughly the same as last year and in line with the brand's original forecast for this summer.
iPhone 14 demand is weak
Apple has reportedly asked suppliers to reduce assembly of the iPhone 14 series by as much as 6 million units in the second half of the year due to reduced demand. However, demand for the pricier iPhone 14 Pro models is stronger than the entry-level version, sources said. One of Apple's suppliers is said to be shifting production from lower-priced iPhones to higher-end models.
In the weeks leading up to the iPhone 14 launch, Apple has already raised its sales forecast, with some suppliers starting to prepare for a 7% increase in orders. China, the world's largest smartphone market, is facing an economic crisis that is also affecting iPhone sales and domestic mobile device makers. According to a Monday report from Jefferies, the iPhone 14 series saw an 11% drop in purchases in China in the first three days of launch compared to its 2021 predecessor.
This isn't an isolated Apple problem, as global demand for personal electronics has also been dampened by inflationary recession fears and other factors. The smartphone market is expected to shrink 6.5 percent this year to 1.27 billion units, according to market tracker IDC.
"Supply constraints that have pulled the market down since last year have eased, and the industry has shifted to a demand-constrained market. High channel inventories, low demand and no immediate signs of recovery have OEMs panicking and sharply reducing demand," said Nabila Popal, research director at IDC. Cut orders for 2022.