© Reuters. Apple Falls 4% on Report It Will Not Ramp Up iPhone 14 Production, Analyst Not Surprised
By Senad Karaahmetovic
Apple (NASDAQ:) shares are down about 4% after Bloomberg reported the tech giant is backing off plans to ramp up iPhone 14 production this year.
The change is a result of slowing demand as the Cupertino-based giant anticipated it would witness a surge in orders. Apple reportedly informed its suppliers to slow down efforts to increase production by 6 million units in the second half of this year, the report added. Apple had previously told its suppliers to prepare for a 7% increase in orders.
Instead, Apple plans to stick to about 90 million units for the second half of the year, around the same amount as in 2021. Moreover, suppliers are shifting production from lower-priced iPhones to premium models as the latter is experiencing much stronger demand.
As expected, shares of the key iPhone manufacturers fell on the news with Foxconn (TW:) dropping 2.7% in today’s trading session.
A Morgan Stanley analyst weighed in on the report to note that fears of strong demand for iPhone 14 Pro/Pro Max are being offset by weaker demand for 14/14 Plus models are likely materializing.
“We’d highlight that our Apple supply chain team has maintained expectations for 90M new iPhone 14 model builds in C2H22 (flat Y/Y), in line with the 90M C2H22 iPhone builds being reported tonight,” the analyst told clients in a note.
He added that Bloomberg’s report “does not imply any downside to our iPhone shipment forecasts,” which are described as “already 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 iPhone demand feedback from the early post-launch period and iPhone builds are recalibrated accordingly,” the analyst concluded.
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