What just happened? Last month saw several reports that claimed Apple was slashing production of its newest iPhones due to it overestimating their popularity. Now, an analyst says more massive cuts could arrive in the March quarter of 2019.
Rosenblatt analyst Jun Zhang wrote in an investor note that Apple could cut iPhone production by four million units during the firm’s fiscal second quarter.
While Apple’s previous reduction in production orders can be attributed to its optimism when predicting the handsets’ sales, Zhang writes that the new cuts will mostly be due to the turmoil Apple faces in China.
At the start of the month, Huawei’s CFO, Meng Wanzhou, was arrested in Canada at the request of the United States for allegedly violating sanctions against Iran. According to Zhang, many Chinese companies are supporting Huawei by subsidizing employees who purchase devices from the company instead of iPhones.
Zhang believes the iPhone XR will be most affected. The cheapest of Apple’s latest iPhones has reportedly already seen its production numbers cut by a third, and it will take another 2.5 million hit during the quarter. Some reviewers found the cheaper iPhone XR to be the most impressive of all three 2018 iPhones, but it seems many Apple fans aren’t convinced.
The iPhone XS, meanwhile, may see its production cut by 1 million units, while the iPhone XS Max's could be dropped by 500,000.
The production cuts have seen many iPhone suppliers reduce their quarterly profit estimates, and it was reported that Foxconn had decreased its overtime hours. Apple’s biggest assembler of handsets is also cutting $3 billion from its costs ahead of a “difficult 2019.”