WSJ: Apple is cutting back iPhone orders

Japanese and South Korean component suppliers are bracing for a significant drop in their business with Apple, reports Nikkei. Citing lackluster sales, the outlet claims that the Cupertino firm is expected to reduce output of its latest iPhone models by around 30% for the January-March quarter.

“The U.S. company had initially told parts makers to keep production of the iPhone 6s and 6s Plus for the quarter at the same level as with their predecessors. But inventories of the two just-launched models have piled up at retailers in markets ranging from China and Japan to Europe and the U.S.”

According to those with knowledge of Apple’s plans, the Cupertino company cut its order forecasts to iPhone suppliers in the last few months based on demand for and inventory of its devices. Given that Apple provides these projections months in advance, it suggests the company is expecting demand for iPhone to fall in the coming weeks and months.

The Journal’s report follows a similar story from Japanese news outlet Nikkei on Tuesday, which revealed Apple is to scale back iPhone 6s and iPhone 6s Plus production by as much as 30 percent in early 2016. The report added that “lackluster sales” have caused 6s and 6s Plus inventories to “pile up” at retailers in almost all markets.

After seeing record-breaking iPhone sales in 2015, analysts warned that Apple would struggle to find growth this year with smartphones that offer few noticeable changes over their predecessors.

Foxconn, which employs 200,000 workers at a plant in Zhengzhou alone, has declined to confirm if its layoffs are related to iPhone orders. Instead, it said the subsidies it received were “in recognition of our company’s contributions to maintaining our significant work force at our Zhengzhou facility throughout that year.”

We’ll find out soon enough. Apple on Monday announced that it will be sharing its Q1 2016 financial results on January 26.


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