Tim Cook at Apple’s launch party, March 8, 2022
The company has reportedly asked suppliers to reduce production of its iPhone SE New 5G phone at $429, at about 2 million to 3 million units, or about 20% of initial orders, according to Nikkei Asia. Apple also reduced AirPods orders by about 10 million units for the whole of 2022, according to the report.
The Nikkei said this drop in production is a sign of the Ukraine war and the negative impact of inflation on demand for electronics.
The iPhone SE is not as popular as Apple’s more expensive iPhones. According to Counterpoint Research, the 2020 version of the iPhone SE represented 12% of all iPhone sales from its launch through the fourth quarter of 2021.
Several major tech companies, including Apple, halted sales in Russia after it invaded Ukraine. The United States, the European Union, Japan, South Korea and Taiwan have imposed economic sanctions on Russia over the invasion, disrupting the supply chain and increasing inflation risks.
Apple has no comment on the report.
Meanwhile, JPMorgan said iPhone SE sales may be limited in China, where analysts said the delivery lead time has expanded and in-store pickup is not available due to the COVID shutdown.
iPhone SE was launched on March 18th. While it was marketed as a low-cost product, the $429 iPhone price is still a surprising increase from the $399 model that Apple launched in 2020.
Apple’s smartphone market share in China has reached a score high In the fourth quarter of 2021, with the iPhone maker regaining the top spot in the country for the first time in six years.
JPMorgan has warned of the risks of competition with local players in China and India who are in a better position and have greater influence in the market. JPMorgan said domestic tariffs could also harm Apple’s ability to compete in these international markets.