Apple Reduces iPhone 6s Orders, Suppliers Brace for Lower Sales: WSJ

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Following Nikkei’s report on Apple reducing iPhone 6s/6s Plus orders, the Wall Street Journal corroborated the change in iPhone production output today, citing three people familiar with the company’s supply chain.

Component suppliers that rode the iPhone’s boom are now bracing for lower sales. Apple has cut its order forecasts to iPhone suppliers in the past several months, according to three people familiar with the company’s supply chain.

Apple provides suppliers with projections on possible orders months in advance and makes adjustments over time, based on demand and inventory, according to suppliers.

The report cites the same reasons we’ve read before: after a year of record iPhone sales (thanks to the iPhone 6 and 6 Plus), the 6s and 6s Plus offered few noticeable changes. Analysts had already raised the red flag, saying Apple would struggle to grow demand for its new iPhones, but Apple CEO Tim Cook was confident that iPhone sales would break the previous 74.5 million record, though he declined to make any projections.

What the supply chain sources say, however, seems to contradict Cook’s positive forecast: Chinese iPhone factories “had some idle capacity in the final two months of 2015,” which is usually the busiest period of the year for Apple.

Some workers were let go on early holiday in December even though the typical new-year holiday season starts in February.

The WSJ report notes that the Zhengzhou government promised Foxconn more than $12 million in subsidies to minimalize layoffs at its operations in the city after Apple’s assembly partner began dismissing workers from its iPhone factory earlier than usual.

IDC analyst James Yan quickly jumped to the conclusion that this should reflect slower-than-expected iPhone sales:

This is the third report talking about lower-than-expected sales, which has obviously pushed Apple’s stock price down, but there is something you should keep in mind when reading such reports: Tim Cook warned investors that Apple’s supply chain is far too complex to jump to early conclusions.

Technology enthusiast, rocker, biker and writer of iPhoneinCanada.ca. Follow me on Twitter or contact me via email: istvan@iphoneincanada.ca

  • jay

    who buys a phone for 400$ on contract? i think people all around the world are buying the iPhone 6 because cheaper and still a good phone

  • Sounds about right.

  • jay

    I bought one and returned it after a week. Just nothing what made me to keep it.