A report out of Taiwan says Apple has slashed production of its newest generation iPhone products this quarter as it deals with softer than expected sales. The report comes just days after Apple CEO Tim Cook lowered the company's revenue guidance, which he attributed in part to "economic weakness" in emerging markets.
According to the report, Apple in December told its iPhone suppliers to scale back production by 10 percent. If true, this would be the second time in just two months that Apple has instructed its iPhone suppliers to make fewer units.
Sources who are supposedly familiar with the matter told Nikkei Asian Review that this move applies to all of Apple's latest iPhone models, including the iPhone XS Max and iPhone XS, and iPhone XR. However, it's not the same across the board—Apple reportedly asked its suppliers to slash production by different amounts, depending on the specific model.
The smartphone market as a whole has slowed. Back in November, International Data Corporation noted that smartphone shipments had declined 13.4 percent in what it dubbed a "challenging" quarter.
Apple is not the only one affected by this, either. Just yesterday, Samsung updated its earnings guidance and told investors that it now expects an 11 percent drop in revenue compared to its previous forecast, and a 29 percent drop in profit.
Earlier this week, HTC also had bad news for investors. The company reported a nearly 62 percent drop in sales for 2018, in part because of intensified global smartphone competition.
We're speculating here, but part of the problem for companies like Apple and Samsung might be pricing. The iPhone XR starts at $749 for the 64GB model, and goes up to $899 for the 256GB version. Meanwhile, users are looking at spending at least a grand for an iPhone XS, and as much as $1,449 for an iPhone XS Max with 512GB of onboard storage.
As nice as the premium models are, Apple and Samsung may have found the upper limit of what users at large are willing to spend on a smartphone. Along those lines, it's probably not a coincidence that Apple said in November that its best selling iPhone model is the iPhone XR, which is the least expensive of the newest generation models.