Apple’s iPhone Production Shuffle
What’s Really Going On?
Apple Inc. (AAPL.O) just decided to cut back on production orders for all three iPhone models that hit the market in September, according to the Wall Street Journal. The company’s new lineup— the iPhone XS, XS Max, and XR—had a launch that was supposed to be a blockbuster, but demand fell short of the hype.
Why the Sudden cutbacks?
- The XR looked likelier to be the “mild‑weather” model than a hype‑package, and orders were thin.
- Apple’s decision to add more models has stretched their supply chain’s nerves – figuring out how many screens, batteries, and chips to buy isn’t as straightforward as it feels.
- Repeat sales predictors from analysts in the prior weeks had already hinted at a dip in iPhone enthusiasm.
Impact on Suppliers
Suppliers felt the heat almost as soon as the news broke:
- Japan Display Inc. slashed its full‑year earnings forecast after finding “weaker smartphone demand.”
- British chipmaker IQE Plc warned that the current year’s financials would take a noticeable hit.
- Both Lumentum Holdings and AMS AG, who supply Apple’s Face ID tech, also lowered their outlooks.
- Tech giant Analog Devices is set to report Q4 results over the weekend.
Market Reactions
On Monday, Apple stock slid about 3.7%, landing at $186.38 (S$255.63). Other tech names were a bit more jittery, dropping 2.7–6%: Lumentum, Skyworks Solutions, and Qorvo.
Where’s the Damage? Finger‑printing the XR Fatigue
Apple trimmed the production plan for the XR by up to a third of the nearly 70 million units that suppliers were under way to assemble between September and February. The WSJ reports that even as recently as last week, Apple updated the production plan again for the XR.
Industry Ripple Effects
Analysts at Cowen & Co see modest downturns for memory chipmakers that power phones:
- Western Digital Corp. may see a 10‑cent dip in earnings for Q4 2018 and Q1 2019.
- Micron Technology could see a 15‑cent headwind for the same periods.
True, Micron’s shares dipped 3.4% and Western Digital fell 1.7%, but they’re still standing.
Apple’s Stance
Apple didn’t weigh in on the whole drama. But if you’re watching the market, remember: they’re still dropping last‑minute surprises as if they’re half‑doing a “full‑time” parent.
