iPhone Slowdown Sends Ripples Throughout Supply Chain

Wall Street Journal graphic

Lower-than-expected demand for Apple Inc.’s new iPhones and the company’s decision to offer more models have created turmoil along its supply chain and made it harder for Apple to predict the number of components and phones it needs, reports The Wall Street Journal citing people familiar with the situation.

In recent weeks, Apple slashed production orders for all three of the iPhone models it unveiled in September, these people said, frustrating executives at Apple suppliers as well as workers who assemble the phones and their components.

Forecasts have been especially problematic for the iPhone XR, Apple’s new lower-price model. Around late October, Apple slashed its production plan by up to a third of the approximately 70 million units it had asked some suppliers to assemble between September and February, people familiar with the matter said.

And in the past week, Apple told several suppliers that it cut its production plan again for the iPhone XR, some of the people said Monday, as Apple battles a maturing smartphone market and stiff competition from Chinese producers.

Apple’s shares fell 4% Monday to $185.86, a drop that put them close to bear-market territory—a decline of 20% or more from a recent peak. The stock is down 16% since Apple on Nov. 1 reported record quarterly revenue and profit but gave an outlook for the holiday quarter that didn’t portend explosive growth.

Apple—which doesn’t give public forecasts for demand or production of its products—declined to comment.