Nikkei Asia reported Monday that Apple is reducing production of its new budget iPhone SE due to weaker-than-expected demand.
According to Nikkei Asia, Apple has asked suppliers to reduce production of the $429 iPhone SE by 2 million to 3 million units, or about 20% of initial orders. According to the report, Apple also decreased orders for AirPods by approximately 10 million units for the entire year 2022.
Inflation and the Ukrainian war are both having a negative impact on electronics demand, as evidenced by the drop in production, according to Nikkei.
Apple’s cheapest iPhone, the iPhone SE, isn’t as popular as the company’s more expensive models. As of Q4 2021, the 2020 version of the iPhone SE accounted for 12% of all iPhone sales, according to CounterPoint Research.
Following Russia’s invasion of Ukraine, several major tech companies, including Apple, halted sales in Russia. As a result of the invasion, the United States, the European Union, Japan, South Korea, and Taiwan all imposed economic sanctions on Russia, causing supply chain disruptions and raising inflation concerns.
This report was not addressed by Apple, so we cannot comment on it.
Meanwhile, JPMorgan warned that sales of the iPhone SE may be limited in China, where delivery lead times have increased and store pick-up is unavailable due to COVID lockdowns.
On March 18, Apple released the iPhone SE. Despite being positioned as a low-cost model, Apple’s $429 iPhone still represents a significant increase over the $399 model it launched in 2020.
After six years, Apple has returned to the top spot in China’s smartphone market for the first time in its history in the fourth quarter of 2021, according to a new report.
According to JPMorgan, there is a competition risk with local Chinese and Indian players who are better positioned with more market leverage. Additionally, tariffs in these international markets could hurt the competitiveness of Apple, according to JPMorgan.