Apple reportedly to slash production of iPhone by 10 percent
Revenue has been hurt by weakening business in China
Faced with a revenue shortfall stemming from disappointing demand for iPhones and a weakening of its business in China, Apple reportedly is cutting its iPhone production by 10 percent during the first quarter of this year.
The Nikkei Asian Review reported Wednesday that Apple told its product suppliers in December to not make as many iPhones as the company initially intended for the quarter ending in March. Nikkei cited what it called “sources with knowledge of the request” for its information on the matter.
The newspaper said Apple intends to cut production on all three of its new iPhone models — the iPhone XS, iPhone XS Max and iPhone XR — and will reduce total output during the quarter to between 40 million and 43 million phones from earlier plans to make 47 million to 48 million
iPhones.
The report that Apple is cutting its iPhone production plans comes one week after the company stunned the business world — and Wall Street — by lowering its revenue estimates for the quarter that ended in December in large part because of weakness in demand for iPhone upgrades and its business in China.
At that time, Apple Chief Executive Tim Cook said the company expects to report fiscal first-quarter sales of $84 billion, down from an earlier forecast of $89 billion to $93 billion in revenue. The company will give its full quarterly earnings results after the close of trading Jan. 29.
“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire yearover-year revenue decline,” Cook said last week.
In an interview with CNBC on Tuesday, Cook said that Apple remains committed to building up businesses beyond the iPhone, and said that the company generated $100 billion sales in its last fiscal year from services and other areas not tied to the iPhone.