Wednesday 9 January 2019 12:34 pm

Apple to cut new iPhone production by 10 per cent as Christmas takes its toll

Apple has reportedly slashed planned production for its three newest iPhone models by about 10 per cent for the next three months, just one week after the tech giant cut its revenue forecasts.

Apple is said to have asked its suppliers to produce less of its iPhone XS, XS Max and XR models than originally planned in the January to March quarter, according to reports by the Nikkei.

If accurate, it would be the second time Apple has cut production of its iPhones in the last two months. This latest request was allegedly made before Apple issued a warning on its revenues on 2 January, in which it said revenue for the final three months of 2018 would be around $84bn (£66.8bn).

This would be down five per cent from the same period in 2017, and $9bn lower than Apple's original highest forecast for the quarter. Chief executive Tim Cook told investors that "more than 100 per cent" of its missed revenue could be attributed to a sales decline in China, as demand for its iPhone and iPad products weakened and fewer customers chose to upgrade their smartphones.

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The cut in revenue guidance was Apple's first in more than 15 years, and triggered a global market rout as fears of an economic slowdown set in.  

Under the newly revised plan, a source told the Nikkei that overall production volume of both older and new iPhones will be reduced to between 40m and 43m units for the quarter, down from an earlier projection of 47m to 48m units.

Market research firm Canalys estimated shipments of smartphones fell 12 per cent last year in China, the world's largest smartphone market. It expects smartphone shipments in 2019 to dip another 3 per cent, to below 400m for the first time since 2014.

Cook has dismissed reports that it's so-called budget iPhone XR, known for its cheaper price than other new iPhone models, is a flop. In an interview with CNBC yesterday, Cook said the XR has been Apple's most popular iPhone every day.

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Additionally, he said Apple's wearable products such as the Apple Watch and Airpods are making more money than its first mainstream product, the iPod, even when the iPod was at its peak.

Apple decided last year to halt reporting on sales numbers of its iPhone and other hardware units, causing concern for investors who feared there may be a slowdown in demand for premium Apple products.

Apple has been contacted for comment on the Nikkei's reports.