Apple, the iPhone maker, is slashing the production of new three new iPhone models in the first quarter of 2019, according to a report. The report stated that the company had asked its suppliers to cut down the production of iPhones last month. This is the second time that the company has asked the trim the iPhone production.
The first request was made before the revenue guidance announcement on January 2 which said that the company has slashed its quarterly revenue forecast for 2018, said the report citing sources. The company’s revenue forecast stood at $84 billion compared to last year’s highest forecast of $93 billion, a 9 billion drop in revenue. The news shook the market which initiated a broad sell-off in the global stock markets.
The new cut in production will affect three new models of iPhone including XS Max, XS, and XR. “The level of revision is different for each supplier and depends on the product mix they supply,” the source cited in the report. The report also revealed that the overall production volume of all models of iPhone will fall from 47 to 48 million units to 40 to 43 million units in the current quarter.
Goldman Sachs has advised its clients that Apple’s revenue for the financial year 2019 has the “potential for further downside”.
The whopping fall in the revenue forecast was announced by Apple CEO, Tim Cook in a letter to investors. He indicated that the fall in the revenue guidance was due to a reduced iPhone demand among Chinese consumers. He blamed the US-China trade war for a decreased demand for iPhones in the country. “We did not foresee the magnitude of the economic deceleration, particularly in greater China. We believe the economic environment in China has been further impacted by rising trade tensions with the United States,” he said.
According to another report, Cook said that Apple’s growing production line is “under appreciated” by the Wall Street “naysayers”. “The product pipeline has never been better. The ecosystem has never been stronger. The services are on a tear,” he added.
Last year, the Cupertino-based tech giant sold over 50 million phone in Q1. However, the figures will be saddening this year as the company has cited a revenue drop coupled with a decrease in demand. Decreasing iPhone prices might just be their last resort to bring back the lost customers.
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