IPhone in Decline? Apple Cuts Production by 30 Percent

Shares in Apple slipped 0.45% in after-hours trading in the United States to $102.25, after losing 2.51% to $102.71 during the regular session, while in London on Wednesday morning, chip supplier ARM was down more than 3% to 973p.

Wall Street analysts have already warned that Apple would struggle to grow demand of its flagship product, that could actually decline iPhone sales year over year in the coming fiscal quarters.

Inventories of the new iPhones, which debuted in September, have piled up at retailers in China and Europe amid lacklustre sales as an increase in the USA dollar against emerging markets currencies makes the device more expensive in those countries, Nikkei reported.

Apple is expected to sell some 220 million iPhones during 2016 according to analysts at FBR Capital Markets, which it describes as a “commendable achievement” for an “s” iPhone cycle, with under-the-skin updates rather than major cosmetic changes.

The multinational technology company, Apple will cut down the production of its iPhone 6s and 6s plus by nearly 30 per cent in the first calendar quarter of this year.

Apple was not immediately available for comment but some Taiwanese suppliers pointed to falling sales, a rare holiday break and a government subsidy as evidence of the gloomy outlook.

This year, Apple is expected to post its first year-over-year drop in iPhone shipments, according to a research note issued by Morgan Stanley analyst Katy Huberty. Once those inventories are depleted, production is expected to return to normal levels in the second quarter.

“Apple has been gaining significant market share in pretty much every region, and I’m not seeing a global slowdown”, Moorhead said.

Problems for Chinese iPhone factories were seen in the final two months of previous year, when they had some surprisingly idle capacity, at a time when they would have been usually rushing to meet orders from Apple, reported the Wall Street Journal on Tuesday.