Tim Cook at the Apple launch event, March 8, 2022
According to Nikkei Asia, Apple is reducing production of the new low-cost iPhone SE due to weaker-than-expected demand.
According to the report, the company has asked suppliers to cut production of iPhone SE, its new $429 5G handset, by about 2 million units to 3 million units, or about 20% of orders. original goods. According to the report, Apple also reduced about 10 million orders for AirPods for the whole of 2022.
Nikkei said the drop in output was a sign of the Ukraine war and the negative impact of inflation on electronics demand.
The iPhone SE isn’t as popular as Apple’s more expensive iPhones. According to Counterpoint Research, the 2020 version of the iPhone SE accounted for 12% of all iPhone sales from launch until the fourth quarter of 2021.
Several major tech companies, including Apple, stopped selling in Russia after the invasion of Ukraine. The US, EU, Japan, South Korea and Taiwan have all imposed economic sanctions on Russia for the move, disrupting supply chains and increasing inflation risks.
Apple did not comment on the report.
Meanwhile, JPMorgan said iPhone SE sales may be limited in China, where analysts say delivery times have extended and in-store pickup is unavailable due to the Covid lockdown.
The iPhone SE launched on March 18. Despite being marketed as a budget product, the iPhone’s $429 price tag is still a surprising increase over the $399 model Apple launched on 2020.
Apple’s smartphone market share in China hit a record high in the fourth quarter of 2021, with the iPhone maker regaining the No. 1 spot in the country for the first time in six years.
JPMorgan warns of the risk of competing with local companies in China and India, which are better positioned and have more leverage in the market. Local taxes could also affect Apple’s ability to compete in these international markets, JPMorgan said.
Read more from Nikkei Asia.