According to the Nikkei Apple will cut production of its latest iPhone models by about 30 percent in the January-March quarter as shedloads sit in storerooms unsold.
The Tame Apple Press insists that production will be scaled back to let dealers go through their current stock and then it will be business as usual. Normally in cases like this it means that the product has reached its end of life. It could explain why Apple is supposed to be fast tracking the iPhone 7. Normally those would come out in October, but it has been rumoured that Jobs’ Mob is releasing them halfway through the year instead.
The report prompted a 2.5 percent drop in Apple shares, which have lost about a quarter of their value from record highs in April, reflecting worries over slowing shipments. Shares in the mainly Asian makers of the iPhones’ screens and chips were also sharply lower on Wednesday.
Wall Street had been getting cynical about Apple’s ability to make record products sales when the smartphone market was saturated and the Chinese market was in the doledrums.
FBR Capital Markets analyst Daniel Ives called the cut “eye-opening.” He said that Wall Street was bracing for a cut but the magnitude was a bit more worrisome.
Some smelt a rat when China’s Zhengzhou capital city government issued $12.53 million in subsidies to companies under Foxconn, a major iPhone assembler.
Foxconn employs hundreds of thousands of workers in the province, and a subsidy of this kind suggests the government is concerned about the company’s ability to maintain its workforce.
Foxconn had granted its factory workers time off around Chinese New Year, which falls on February 8, rather than follow its past practice of paying overtime to keep its production lines humming through the biggest holiday in China.