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The Wall Street Journal claims that Apple is cutting back iPhone production across the board. "People familiar with the situation" say that the iPhone XR was hit particularly hard, mirroring a report by Nikkei Asian Review earlier this month. But according to the WSJ's sources, Apple cut production for the iPhone XR again last week, and production orders for all three new models were cut in "recent weeks." Apparently, Apple's inclusion of older models and their increasing prices are making it harder for their producers to predict supply, which is severely impacting their business.
Last year, many suppliers were hurt by Apple's excessively optimistic initial production forecast for the iPhone X, which it then slashed by some 20 million units for the first three months of 2018. "Doing business with Apple is very risky as it often reverses what it has promised," said an executive with a supplier. Supplier frustrations have been compounded by the lack of growth in iPhone unit sales in recent years. Since peaking in fiscal 2015, the number of iPhones sold annually has fallen 6% to 217.7 million units. While making components for 200-million plus iPhones is still tremendous business for suppliers, most relied on the growth in iPhones sold to increase their profits. Apple tightly controls margins and asks many suppliers to make big investments in specialized machinery to make its products, suppliers say. "Growth fixes a lot of sins," the executive at an Apple supplier said. "When it slows, rocks start to show up in the bottom of the ocean."
Last year, many suppliers were hurt by Apple's excessively optimistic initial production forecast for the iPhone X, which it then slashed by some 20 million units for the first three months of 2018. "Doing business with Apple is very risky as it often reverses what it has promised," said an executive with a supplier. Supplier frustrations have been compounded by the lack of growth in iPhone unit sales in recent years. Since peaking in fiscal 2015, the number of iPhones sold annually has fallen 6% to 217.7 million units. While making components for 200-million plus iPhones is still tremendous business for suppliers, most relied on the growth in iPhones sold to increase their profits. Apple tightly controls margins and asks many suppliers to make big investments in specialized machinery to make its products, suppliers say. "Growth fixes a lot of sins," the executive at an Apple supplier said. "When it slows, rocks start to show up in the bottom of the ocean."