With weaker than expected demand, Apple has reportedly cut production orders of both iPhone XS models as well as the iPhone XR. The news comes from the Wall Street Journal and indicates that the Cupertino tech giant is slowing down production because of the lack of demand.
The comprehensive article points out that Apple has found it challenging to predict demand for the iPhone XS lineup and the iPhone XR. The struggle appears to be from the fact that they have a three-phone lineup. Couple this with an overall slowdown in the smartphone market, it creates a challenging situation for Apple and their suppliers.
Slow down sin production are not new. Apple has done this in the past with the iPhone X and previous models. Usually these product cuts happen towards the middle or end of the lifecycle of the iPhone in question. For these cuts to happen early on, it has cause a lot of concern amongst investors. Apple stock fell some 5% last week after some suppliers reported lower than expected sales forecasts. Interestingly, the Average Sale Price (ASP) of the iPhone lineup is expected to increase this quarter. In simple terms, that means that Apple doesn’t need to sell as many iPhones in order to hit their revenue and profit numbers.
All of this angst by investors is compounded by the fact that Apple is no longer going to report unit sales as part of their financial disclosures. This has lead many to dump their AAPL stock but also has raised fears of Apple not being able to keep their current growth streak growing.
Pro Tip: In an over-indexed market for growth, nobody will hit their numbers forever.
Additional Pro Tip: Apple is not going to die tomorrow. They are still expected to make between $89 and $94 billion in the current quarter, which includes Christmas.