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Apple cuts production orders for all three new iPhone models: WSJ

Stock MarketsNov 19, 2018 12:08PM ET
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© Reuters. FILE PHOTO: A customer compares the size of the new iPhone XS and iPhone XS Max at the Apple Store in Singapore

(Reuters) - Apple Inc (O:AAPL) has cut production orders in recent weeks for all three iPhone models launched in September, the Wall Street Journal reported on Monday, citing sources.

A lower-than-expected demand for the new iPhones and Apple's decision to offer more models has made it difficult to anticipate the number of components and handsets the company needs, according to the WSJ report https://www.wsj.com/articles/apple-suppliers-suffer-as-it-struggles-to-forecast-iphone-demand-1542618587.

Apple shocked investors a few weeks ago with a sales forecast for the Christmas quarter below Wall Street expectations, prompting certain suppliers to issue warnings that pointed to weakness in new iPhone sales.

Screen maker Japan Display Inc (T:6740) cut its full-year outlook citing weaker smartphone demand, while British chipmaker IQE Plc (L:IQE) said it expects a material reduction in its financial performance in the current year.

Lumentum Holdings Inc (O:LITE), AMS AG (S:AMS), companies which supply Apple with software needed for its FaceID technology, also lowered their forecasts.

Another supplier Analog Devices Inc (O:ADI) is expected to report fourth-quarter results before markets open on Tuesday.

Apple shares were down 3.7 percent at $186.38 on Monday, while Lumentum, Skyworks Solutions Inc (O:SWKS) and Qorvo Inc (O:QRVO) were down between 2.7 to 6 percent.

Forecasts have been particularly problematic for iPhone XR with Apple cutting its production plan by up to a third of the nearly 70 million units some suppliers had been asked to produce between September and February, WSJ reported.

As recently as last week, Apple informed several suppliers that it had lowered its production plan again for iPhone XR, the Journal said.

The company started selling its latest generation of phones, the iPhone XS and XS Max, in September and the XR model in October.

Analysts at Cowen & Co expect a modest hit from iPhone production cuts on memory chipmakers like Western Digital Corp (O:WDC) and Micron Technology Inc (O:MU).

The brokerage forecast a 10 cent headwind to Micron and 15 cent headwind to Western Digital in the fourth quarter of 2018 and the first quarter of 2019 on lower iPhone builds.

Micron's shares were down 3.4 percent while Western Digital was down 1.7 percent.

Apple did not respond to a request for comment.

Apple cuts production orders for all three new iPhone models: WSJ
 

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Comments (7)
David David
David9 Nov 19, 2018 4:53PM ET
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please us which source reported that...otherwise it is all bulls...Apple will head to $250 in the next 6 months.
Ghoda Sandrokottos
Ghoda Sandrokottos Nov 19, 2018 2:06PM ET
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It was once inspiring! Now it is expiring!
Nick Smith
Nick Smith Nov 19, 2018 12:16PM ET
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Apple is fine as usual. More revenue and profit in the coming years. Cash, cash and more cash. Too expensive? Are you insane? People spend hours on their devices.
Kev Davey
Kev Davey Nov 19, 2018 8:11AM ET
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it's a lack of innovation.
ShengJie Teh
ShengJie Teh Nov 19, 2018 6:57AM ET
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The same piece of recycled news gets to x number of media and aapl gets punished x number of times. Tell me someone isnt trying to manipulate it to enter lower
Peter Dee
Peter Dee Nov 19, 2018 5:58AM ET
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"Suppliers" How many suppliers are being effected ?
M.N. Youshei
M.N. Youshei Nov 19, 2018 5:26AM ET
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if apple lowers prices, they will sell more. at $1000 a piece, it costs
Kev Davey
Kev Davey Nov 19, 2018 5:26AM ET
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I think it's more of a lack of innovation. They haven't made an inspiring product in a few years now.
Daniel Benhardt
Daniel Benhardt Nov 19, 2018 5:26AM ET
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Kev Davey  It's because smartphones already do everything they can be reasonably expected to do at this time. A few years ago when the devices were simpler, slower, and lowsier, it was easy to make a big jump every year. This year's iPhone is as powerful as a midrange laptop. . What would it take in a new iPhone to be 'inspiring'? Would it need to project holograms into the room like R2D2?
 
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