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A Nikkei report this morning suggests that Apple is significantly decreasing part orders for its upcoming 2018 iPhone models, a move deemed “quite conservative” by one of multiple sources confirming the change. According to the report, Apple is reducing orders from last year’s 100 million units worth of parts down to 80 million, a 20 percent decrease.
Though Apple has warned observers not to make assumptions about its plans or sales based on supply chain reports — and such assumptions led to conflicts between Apple and analysts over the iPhone X’s relative strength this year — the reports can provide a glimpse into the notoriously secretive company’s expectations. Nikkei notes that worldwide smartphone shipments slightly contracted for the first time in 2017, falling 0.3 percent to 1.46 billion units, and that iPhone sales declined a similarly modest 1 percent at the end of last year.
If accurate, the report could simply suggest that Apple plans to avoid a repeat of the 2017-2018 iPhone X, iPhone 8, and iPhone 8 Plus scenario, where phones became abundantly available to interested customers relatively quickly after their release rather than being subject to major shortages — the latter a false sign of success that’s paired with consumer disappointment. Other possibilities are that the change in orders is merely short-term and will be revised later in 2018, or that Apple is protecting itself against a potential steep drop in global sales as the smartphone market cools off.
However, the move could also signal that the company is not prepared to back down from an iPhone pricing strategy that has lifted its profits despite stagnant unit sales. The iPhone X’s high starting price of $999 has enabled Apple to hit record average selling prices for iPhones, and reports have conflicted about whether this year’s top models will be equally or less expensive. Analyst Ming Chi Kuo recently predicted a $200 price cut to the iPhone X’s direct successor, as well as an attractive $600 entry point for a new mid-range successor to the iPhone 8. But a 20 percent cut in orders could suggest that Apple prefers to maintain existing prices and take a hit on unit sales.
The report suggests Apple is moving aggressively to make both of those models and a Plus-sized version of the iPhone X available in September, solving touch and depth-sensing screen production issues that were said to be endangering the launch of the lowest-cost model. Taiwanese companies Foxconn, Pegatron, and Wistron are responsible for producing the devices, which Apple is said to be in the process of verifying this month as it finalizes assembly plans ahead of recruitment efforts for the first round of mass-manufacturing.
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