Production Orders Cut By Apple For Its Latest iPhones: WSJ

A news report published in The Wall Street Journal claims that orders for the newest of the iPhones is being curtained by Apple Inc. The report cited sources who claimed that this was because of weaker than expected demand for the newly launched devices – especially for the iPhone XR

The WSJ report claims that the company is finding it difficult to anticipate the v number of components and handsets that would be required because of the decision of the iPhone maker to offer more models during the last launch and the lower than anticipated demand for the new iPhones.

It was just a few weeks ago that Apple announced a Christmas quarter sale forecasts that was well below the expectation expectations of the Wall Street which shocked analysts and investors alike which triggered panic among some of the supplier and  induced them to issue profit and revenue warnings which clearly indicated a fall in demand for the new iPhones.

While weaker smartphone demand was cited to be the reason by screen manufacturer Japan Display Inc for its decision to cut its full-year outlook, a material reduction in its financial performance in the current year is expected by the British chipmaker IQE Plc according to the announcement of the company.

Forecast was also lowered by companies supply Apple with software needed for its FaceID technology, such as Lumentum Holdings Inc and AMS AG.

There was a drop of 3.7 per cent in the shares of Apple at $186.38 on Monday. The stocks of some of its suppliers as Lumentum, Skyworks Solutions Inc and Qorvo Inc fell between 2.7 to 6 percent.

The WSJ report further claims that the suppliers of Apple had been given a forecast of about 70 million units of iPhones in that needed to be manufactured between September and February  next year.  But the report states that the iPhone maker has cut that number by as much as one third which clearly indicates that the company has been unable to accurately predict the demand for its latest iPhones.

Ge report further said that a number of suppliers were informed by Apple about its decision to lower its production planning for its iPhone XR as recently as last week.

The iPhone XS and XS Max were put up for sale in September while the iPhone XR was put up for sale at the stores and online in October by Apple.

For memory chipmakers like Western Digital Corp and Micron Technology Inc, there would be limited impact because of the cuts iPhone production according to predictions by analysts at Cowen & Co. The firm however predicted that in the fourth quarter of 2018 and the first quarter of 2019, the cut iPhone production there would be a 10 cent headwind to Micron and 15 cent headwind to Western Digital.

There was a 11.7 per cent drop in shares of Western Digital and a 3.4 per cent drop in the stocks of Micron.

No comments from Apple has been available on the news report.

(Adapted from TheVerge.com)

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Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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