According to a report by Nikkei Asia, Apple is scaling back production of its new budget phone due to weak demand.
The company has asked suppliers to cut production of the new phone by about 2 million units to 3 million units, or 20% of the initial orders, according to the report. According to the report, Apple reduced orders for AirPods by 10 million units.
The decrease in production is a sign of the Ukrainian war and its negative impact on electronics demand.
The more expensive iPhones are more popular. The 2020 version of the iPhone accounted for 12% of all sales until the fourth quarter of 2021, according to Counterpoint Research.
Apple halted sales in Russia after the invasion of Ukraine. The U.S., EU, Japan, South Korea and Taiwan all imposed sanctions on Russia because of the invasion.
An Apple spokesman was not available to comment on the report.
In China, the analysts said delivery lead times have expanded and store pick-up is unavailable due to COVID lock-down.
On March 18th, the iPhone SE was launched. While marketed as a budget product, the $429 price tag is still a surprising hike from the $399 model Apple launched in 2020.
Apple reclaimed the number one spot in China for the first time in six years in the fourth quarter of the year, after hitting a record high in the market.
Local players in China and India have more leverage in the market, which is a competition risk according to JP Morgan. Local tariffs could hurt Apple's ability to compete in international markets.
You can read more from Nikkei Asia.
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