A new Nikkei Asia report says Apple is reducing the production of its new affordable iPhone SE due to lower-than-expected demand.
According to the publication, the company has reportedly requested suppliers to reduce the manufacturing of the iPhone SE, its new $429 affordable 5G phone, by roughly 2 million to 3 million devices, or about 20% of initial orders. According to the source, Apple has lowered orders for AirPods by around 10 million devices for the full fiscal year 2022.
Nikkei said the decrease in production is a result of the Ukraine war and inflation's detrimental influence on electronics demand.
The new iPhone SE has been available for less than a month, following its announcement at Apple's "Peek Performance" event. The iPhone 2022 is the successor to the 2020 model, and it features the A15 Bionic processor from the iPhone 13 as well as 5G compatibility.
The iPhone SE isn't as well-known as Apple's higher-priced iPhones. According to Counterpoint Research, from its launch through Q4 2021, the 2020 edition of the iPhone SE accounted for 12% of all iPhone sales.
Following Russia's invasion of Ukraine, several major IT companies, including Apple, ceased sales in the country. The U.S., the European Union, Japan, South Korea, and Taiwan have all slapped economic sanctions on Russia as a result of the action, causing supply chain disruption and rising inflation concerns.
Meanwhile, JPMorgan noted that iPhone SE sales could be limited in China, where delivery lead times have increased and store pickup is prohibited due to Covid lockdowns.
Concurrent with the news, respected Apple analyst Ming-Chi Kuo said today in a tweet that he is lowering his 2022 shipping predictions for the new iPhone SE from 25 to 30 million to roughly 15 to 20 million units. Lower shipments, according to Kuo, were caused by poor demand.
"Shanghai lockdown doesn't affect the iPhone SE production. However, the new iPhone SE demand is lower than expected," Kuo wrote.
On March 8, the iPhone SE was released. Despite being billed as a budget phone, the iPhone's $429 price tag is a significant increase above the $399 model Apple released in 2020.
In the fourth quarter of 2021, Apple's smartphone market share in China reached a new high, with the iPhone maker recovering the top spot in the country for the first time in six years.
JPMorgan warned of the risk of competition from local players in China and India who are better positioned and have more market clout. According to JPMorgan, local taxes could hamper Apple's ability to compete in certain overseas markets.