The Nikkei daily said on Monday that Apple Inc is going to reduce iPhone and AirPod production owing to a demand slowdown caused by the Ukraine situation and rising inflation, citing sources briefed on the topic.
According to the report, Apple plans to create 20% fewer iPhone SEs next quarter than expected, or approximately 2 million to 3 million handsets. Apple has reportedly lowered AirPods orders for 2022 by more than 10 million units, according to the report.
Apple did not immediately react to a Reuters request for comment, with its stock down roughly 2% in premarket trading.
Analysts have predicted that COVID-19 lockdowns in Chinese cities and a spike in inflation due to the Ukraine conflict will impact smartphone demand this year, and the news of lower demand confirms their predictions.
According to analysts, Apple is facing issues due to the lack of a design improvement for the newest SE and a $30 price rise from the 2020 model.
Ming-Chi Kuo of TF International Securities cut his iPhone SE shipment forecast for this year from 25 million to 30 million units to between 15 million and 20 million units.
"It looks extremely similar to the iPhone SE (2020), a second refurbishing of the iPhone 8, and it is even less likely to excite customer interest," said Eddie Han of Taiwan-based Isaiah Research, who reduced his predicted sales for the model by 5 million units.
Apple is anticipated to release a new iPhone series later this year, but analysts believe it's too early to predict any impact on the new lineup.