Tim Cook at the Apple launch event on March 8, 2022
Apple is cutting production of its new budget iPhone SE due to lower-than-expected demand, Nikkei Asia reported on Monday.
The company reportedly asked vendors to cut production of the iPhone SE, its new 5G budget phone for $ 429, by about 2 million units to 3 million units, or about 20% of original orders, the publication said. Apple has also cut orders for AirPods by about 10 million units for the entire 2022 year, the report said.
Such a decline in production is a sign of the negative impact of the Ukrainian war and inflation on demand for electronics, Nicaea said.
The iPhone SE is not as popular as Apple’s more expensive iPhone. According to Counterpoint Research, the 2020 version of the iPhone SE accounted for 12% of all iPhone sales from launch to the 4th quarter of 2021.
Several major technology companies, including Apple, have stopped selling in Russia after its invasion of Ukraine. The US, EU, Japan, South Korea and Taiwan have imposed economic sanctions against Russia for this action, disrupting the supply chain and increasing inflation risks.
Apple did not comment on the report.
Meanwhile, JPMorgan said sales of the iPhone SE may be limited in China, where analysts say delivery times have increased and pickup from the store is unavailable due to Covid locks.
The iPhone SE was launched on March 18th. Although it sells as a budget product, the $ 429 price of the iPhone is still a surprising increase over the Apple model released in 2020 for $ 399.
Apple’s share of the smartphone market in China reached a record high in the fourth quarter of 2021, when the iPhone maker ranked first in the country for the first time in six years.
JPMorgan warned of the risk of competing with local players in China and India who are better placed and have more leverage in the market. Local tariffs could also damage Apple’s ability to compete in these international markets, JPMorgan said.
Read more from Nikkei Asia.