Written by Sinad Karahimetovic
Apple (NASDAQ:) shares fell about 4% after Bloomberg reported that the tech giant is backing away from its plans to ramp up iPhone 14 production this year.
The change came as a result of slowing demand as the Cupertino-based giant predicted that it would see a rise in orders. The report added that Apple told its suppliers to slow efforts to increase production by 6 million units in the second half of this year. Apple had previously asked its suppliers to prepare for a 7% increase in orders.
Instead, Apple plans to commit about 90 million units in the second half of the year, roughly the same amount as in 2021. Moreover, suppliers are shifting production from lower-priced iPhones to premium models as the latter sees much stronger demand. .
As expected, shares of major iPhone makers slid in the news, with Foxconn (TW:) down 2.7% in today’s trading session.
An analyst at Morgan Stanley threw his weight on the report to suggest that concerns about strong demand for the iPhone 14 Pro/Pro Max are offset by weak demand for the 14/14 Plus models are likely to materialize.
“We would like to highlight that Apple’s supply chain team has maintained expectations of 90 million new iPhone 14 models at C2H22 (flat Y/Y), in line with the 90M C2H22 iPhone reported,” the analyst told customers in a note. Tonight” .
He added that the Bloomberg report “doesn’t indicate any downside to our iPhone shipping forecast,” which he describes as “really conservative.”
“It is still early in the iPhone 14 cycle, and the next 3-5 weeks will remain critical in determining the strength of the iPhone 14 cycle as the supply chain receives additional feedback on iPhone demand from the early post-launch period and iPhone releases recalibrated accordingly.”