Apple: Cuts iPhone Production

Apple, Inc. (NASDAQ: AAPL) continues to trend downwards after the company reported a production cut of iPhones by roughly 10 percent during the next quarter (January-March). The reason for the cut was due to slow sales of the latest iPhone. The report also says Apple’s iPhone 7 Plus remains popular and the company cannot meet demand due to a shortage in camera sensors.

According to CNBC, Apple could slash iPhone production 10 percent in the first quarter of 2017, The Nikkei Asian Review reported on Friday, citing calculations based on data from suppliers. Nikkei reports that the iPhone 7 has sold “more sluggishly than expected,” drawing a parallel to last year’s iPhone 6s, which piled up in warehouses due to oversupply.

“You always have to take supply chain data with a grain of salt,” Colin Gillis, senior technology analyst and director of research at BGC Financial, told CNBC’s “Power Lunch” on Friday. “But that doesn’t neglect the fact that we’re coming into the weak part of Apple’s seasonal cycle.”

At the end of November, UBS analyst Steven Milunovich noted that Apple might be “conservative with its supply chain” this March to not make the same mistake as last year’s overestimating demand.

“Last year Apple initially provided the supply chain with high numbers only to cut numbers later,” Milunovich wrote. “Given last year’s misread on demand, its clear visibility beyond one quarter is limited causing Apple to play it safe for now. Apple could keep inventory lean through Dec in order to support what could be a difficult Mar.”

Leave a Comment