Apple to Trim iPhone 14 Production Again, Says Supplier
Apple supplier Murata Manufacturing Co. expects the tech giant to further cut iPhone 14 production in the coming months due to weakening demand — reports Bloomberg.
Demand for some of Apple’s latest iPhones has been underwhelming, with the company previously trimming iPhone 14 Plus orders by 40%. The waning demand is a function of stunted economic growth, rising inflation, and consumers tightening their belts as the world heads into the throes of a recession.
“Judging by handset availability in stores, I see a downward revision happening,” said Murata President Norio Nakajima in an interview. “I hope that it won’t be too deep.”
Murata’s forecast for its handset-component business is often seen as an industry indicator because the company supplies not only Apple but also Samsung and leading Chinese smartphone makers with electronic modules and other components.
Nakajima said that Murata’s latest global smartphone production estimate for this fiscal year is 1.08 billion units, down from an initial projection of 1.37 billion in April. While these adjustments were largely driven by decreased shipments from Chinese manufacturers, Nakajima said that any further decline would be because of Apple.
“If our forecast was to fall further, that would be because of the U.S. customer,” he said. The Murata President didn’t name Apple, as is standard for all of the iPhone maker’s suppliers. However, Apple is Murata’s highest-priority “U.S. customer,” and Nakajima also didn’t deny that he was referencing Apple.
“I went shopping with my son last Sunday to buy a handset by our main customer for him, and the store had every model and every colour in stock,” Nakajima added. “I wouldn’t be surprised if, down the road, the customer even further revises down its forecast.”
The holiday quarter, historically Apple’s biggest of the year, isn’t going all that well as the company is grappling with a supply shortage with the iPhone 14 Pro series, and a demand issue with the base iPhone 14 lineup.
Apple can’t fulfill holiday demand for iPhone 14 Pro models — in the U.S., delivery wait times at Apple’s online store have slipped well past Christmas. The iPhone 14 and iPhone 14 Plus, meanwhile, aren’t selling well despite abundant supply.
Apple last month cut its iPhone 14 production target for the year from 90 million units to 87 million. However, a recent report from TF International Securities analyst Ming-Chi Kuo suggests that Apple might miss those numbers by 15-20 million units, largely due to disruptions at supplier Foxconn’s largest iPhone factory in China.
Nakajima noted that Apple’s supply-side problems will dissipate as production ramps back up. However, withering demand is a larger concern that won’t clear up until economic pressures are alleviated.
According to Nakajima, the global smartphone market will start recovering “at a gradual pace” in the fiscal year starting in April 2023.