Nikkei Asian Review, citing component supplier based sources, reports that Apple will continue to reduce production levels of iPhones for the April-June time period. The latest adjustment comes after forecast volumes were lowered in the January-March quarter.
According to the report, the continued slowdown stems from slowing sales of the iPhone 6s and iPhone 6s Plus models, while the recently announced iPhone SE does not have enough demand volume to offset volume declines of the former two models.
The implication will obviously be an impact on component suppliers of LCD displays, memory chips and image sensors who rely on the iPhone’s huge volumes for their own revenue and profitability expectations. The Nikkei report comes after an EBN report published in in early February indicating earlier cutbacks.
From our Supply Chain Matters lens, this news has broader implications. Other product areas such as the iPad continue to experience declining demand, while Apple has been very reluctant to disclose any volume numbers related to its Apple Watch products, which can be interpreted to mean either exceeding or declining expectations.
For the globe’s most admired product development and supply chain organization, the pressure for coming-up the next big market disruptive product has to enormous. It’s no secret that the iPhone product lineup is the soul of Apple’s ongoing healthy levels of profitability, and thus the beast needs to be fed a constant high-calorie diet. Thus as we enter mid-year, we can expect that something had better be churning on the product front since suppliers are obviously jittery.
Perhaps the speculation that Apple will enter the electric car business may be closer than we think, else, something else may be brewing on the acquisition screen.