Tim Cook at the Apple launch event, March 8, 2022
Apple is cutting production of its new budget iPhone SE due to weaker-than-expected demand, Nikkei Asia reported on Monday.
The company reportedly asked its suppliers to cut production of the iPhone SE, its new $429 budget 5G phone, from about 2 million units to 3 million units, or about 20% of initial orders, according to Nikkei Asia. Apple also reduced AirPods orders by about 10 million units for the whole of 2022, according to the report.
This drop in production is a sign of the Ukrainian war and the negative impact of inflation on electronics demand, Nikkei said.
The iPhone SE is not as popular as Apple’s more expensive iPhones. According to Counterpoint Research, the 2020 version of iPhone SE accounted for 12% of all iPhone sales from launch through Q4 2021.
Several major tech companies, including Apple, halted sales to Russia after its invasion of Ukraine. The US, EU, Japan, South Korea and Taiwan have all imposed economic sanctions on Russia for the invasion, disrupting the supply chain and raising inflation risks.
Apple did not comment on the report.
Meanwhile, JPMorgan said iPhone SE sales may be limited in China, where analysts said delivery times have lengthened and in-store pickup is unavailable due to COVID shutdowns. .
The iPhone SE was launched on March 18. Despite being marketed as a budget product, the iPhone’s $429 price tag is still a surprising uptick from the $399 model that Apple launched in 2020.
Apple’s smartphone market share in China hit an all-time high in the fourth quarter of 2021, with the iPhone maker reclaiming the top spot in the country for the first time in six years.
JPMorgan warned of a risk of competition with local players in China and India which are better located and have more weight in the market. Local pricing could also hurt Apple’s ability to compete in those international markets, JPMorgan said.
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