Cutting corners: Apple’s most recent handsets, the iPhone XR, XS, and XS Max, didn’t exactly set the smartphone industry ablaze with excitement, and it seems the company may have overestimated their popularity. According to a recent report, the firm has decided to reduce orders for all three phones.
It was only a few weeks ago when we heard that Apple had slashed production of the iPhone XR as demand failed to meet expectations. According to the Wall Street Journal, this is an issue with all three new iPhones, which has “created turmoil along its supply chain.” The move comes as global smartphone sales are slowing down, along with what appears to be weak demand from the Chinese market.
An anonymous supplier told the WSJ: “Growth fixes a lot of sins. When it slows, rocks start to show up in the bottom of the ocean.”
“Doing business with Apple is very risky as it often reverses what it has promised,” they added.
The report repeats earlier claims that iPhone XR production will be cut by a third, though the reduction in iPhone XS and XS Max orders don’t appear as severe. Many iPhone suppliers have cut their quarterly profit estimates after a large customer, which is almost certainly Apple, reduced its orders. Even Foxconn has reduced its overtime hours that are typically available during peak production periods.
At the start of November, Apple’s stock fell after it revealed the company might miss Wall Street expectations during the upcoming holiday season. It also said it would no longer report how many devices it sells each quarter, focusing instead on their increasing revenue—a result of the iPhone’s higher Average Selling Price (ASP).
Slashing the iPhone orders won’t have Apple worried. The ever-increasing ASP of its phones and the massive growth of its Services division means revenue is at an all-time high (the last Q4 was its best ever). But the company's suppliers are suffering as a result of the reduced demand.