According to the Nikkei Asian Review, tech titan Apple is planning major cuts in the production of its flagship iPhone 6s and iPhone 6s Plus in the first quarter of 2016.
Nikkei’s sources suggest that Apple will scale back the output of its latest iPhone models by close to a third in the ongoing January-March quarter. This unplanned iPhone 6 production cut will will be a major blow to many of the firm’s Japanese and South Korean parts suppliers.
The sources with knowledge of the matter say that Apple initially told suppliers to keep production of the iPhone 6s and 6s Plus parts at the same level as they had a year earlier, but then changed its mind after inventories of the two flagship models have started to stack up at retailers from China and Japan to Europe and the U.S. given weak post holiday sales.
Analysts say that slower sales are largely due to customers seeing relatively little improvement in performance over the prior generation of iPhones, while the significantly stronger dollar led to large price increases in many emerging markets.
According to Nikkei’s sources, output will only be temporarily reduced so that retailers can move their current stock. They note that iPhone 6s production is anticipated to return to normal levels in the second quarter when the inventory adjustment has been made.
Industry analysts say suppliers likely to feel the pinch during the first quarter production cuts include liquid crystal display makers Japan Display, Sharp and LG Display, image sensor supplier Sony and electronics manufacturers TDK and Kyocera. They also note this means that overall projections for iPhone 6s production in 2016 need to be revisited.
Similar Apple iPhone production cut in 2013
On a historical note, the Cupertino-based tech giant also cut iPhone production back in 2013, which led to Apple-dependent parts suppliers struggling to get through a several month production hiatus. The companies came up with some creative solutions, and things actually turned out well in a few cases, as firms managed to land business with Huawei Technologies and other Chinese manufacturers.