The American tech giant is reportedly cutting down on its production budget shortly after launch.
Apple is reportedly cutting its iPhone SE production in China by about 20 percent, less than two weeks after the new smartphone was first launched.
According to media reports, the decision was made due to demand far lower than anticipated.
The American technology giant has requested that its suppliers cut back on iPhone SE production, the new budget 5G smartphone retailing for $429. The reduction is by about 20 percent of the initial orders, reducing totals from about 3 million units to 2 million units, according to recent media reports. Those same reports have indicated that Apple has also cut back on the orders it has made for AirPods by about 10 million units for this entire year.
The reduction in production has many different causes. That said, major drivers included the war in Ukraine and the negative impact of inflation on electronics demand.
The iPhone SE has never been as popular as some of Apple’s more expensive smartphone models.
Counterpoint Research Data showed that the 2020 version of the less expensive Apple smartphone represented only 12 percent of the brand’s phone sales from its launch through Q4 2021.
A number of technology giants have stopped all sales in Russia due to that country’s invasion of Ukraine. Moreover, the United States, European Union, South Korea, Japan and Taiwan all imposed economic sanctions against Russia as a result of its war on Ukraine. This has caused the risk of rising inflation and supply chain disruptions to increase.
As is Apple’s tradition, it has not commented on any of the reports on its sales or product production.
That said, an analysis by JPMorgan said that the smartphone model’s sales may have drooped in China. Analysts stated that delivery lead times in China have grown and new lockdowns due to COVID-19 have made store pick-up of the devices unavailable.
The iPhone SE only just launched on March 18. While it was marketed as a budget product just like the model it launched in 2020, the $429 price tag is substantially higher than the $399 from a couple of years ago.