After an overwhelming response to the launch of Apple’s new iPhone 14 and iPhone 14 Pro, there was a gap in the market as there was a rise in demand for the products. However, Apple is backing off from its plan to increase production of its new products as the surge in demand failed to transpire.
Fall in Production
According to reports, as many as six million units have been pulled back from the assembly, which were supposed to be launched in the second half of 2022. Apple will remain on track to produce their estimated 90 million handsets for the period, which was their initial plan and also the same level as the years before. This number is also the same as Apple originally forecasted it, so any efforts suppliers had to put in for the additional six million units were taken back.
This year the demand for the Pro models has increased compared to the entry-level models mainly because of the new features launched in the Pro models. So rather than increasing overall production, many suppliers are shifting their production capacities from the base models to the premium models.
Apple’s decision to back off from its increase in production had an impact on the stock market and also had an impact on the companies that made their semiconductor chips. Right after the news, the US stock index turned red, while contracts on NASDAQ 100 fell around 1.3%. Apple’s biggest semiconductor chip manufacturer, “Taiwan Semiconductor Manufacturing Company,” suffered a 1.8% loss, and their biggest iPhone assembler, “Hon Hai Precision Industry,” suffered a 2.4% loss in the market. Apple’s specialized products producers, which include “Largan Precision” and “LG Innotek,” went down by more than 7%.
Apple had projected that its sale of the iPhone 14 would be higher than its predecessors, and many suppliers had made preparations for a 7% boost in order. So the news that Apple had backed off from the increase in production had a negative impact on all suppliers and manufacturers. The fact that Apple refused to increase production is also because sales of the iPhone 14 in its first three days in China were 11% down compared to the previous year. Due to the global recession and inflation caused by the Russia-Ukraine war, the smartphone market is expected to drop by 6.5% to 1.27 billion units, according to market data.