In its early days of launch, iPhone 14 is seeing weaker demand in one of Apple’s most formidable markets in China. The global macros are playing a key role in the demand drop worldwide.
On Wednesday, September 28, despite the broader recovery on Wall Street, stocks of Apple Inc (NASDAQ: AAPL) came under pressure over concerns over the demand for Apple’s latest iPhone lineup.
iPhone 14 Demand
Apple released its iPhone 14 series of handsets earlier this month and upgraded its sales projections. Although Apple had initially projected a 7 percent boost in orders, the scenario turned otherwise. Sources familiar with the matter said that Apple has abandoned its attempt to boost the production of the iPhone 14 lineup.
During the second half of this year, the tech giant will be producing 90 million iPhone units. This is roughly the same sales level as the year before. However, it turns out that the demand for the higher-end iPhone 14 Pro model remains higher than the entry-level lineup. One of the Apple suppliers is also shifting production capacity from ower-priced iPhones to premium models.
On Wednesday, September 28, the AAPL share price tanked 4% before recovering by the end of the day. The stock ended trading under $150 on Wednesday, defying the broader recovery on Wall Street. Speaking on the development, Ben Wood, an analyst at CCS Insight said:
“Although Apple has been more resilient than most of its competitors and pre-orders and initial shipments of the latest iPhone 14 family have been strong, it seems the company is not immune from the broader macro-economic pressures facing many of the key markets where it operates. It is always difficult to know how accurate rumors around Apple’s production plans are, but it would make sense if it has decided not to make big commitments to future production increases in the current climate.”
Demand Drop in China
China, one of the biggest markets for iPhones is seeing a major demand drop amid the economic slump. Purchases for the iPhone 14 over the first three days of its availability have tanked 11% in China, in comparison to its predecessor last year, reported Jefferies.
Also, amid the current economic slowdown, higher inflation, and recession fears, the global demand for personal electronics is also falling. As per reports, the smartphone market is likely to shrink by 6.5% this year to 1.27 billion units. Nabila Popal, research director at IDC said:
“The supply constraints pulling down on the market since last year have eased and the industry has shifted to a demand-constrained market. High inventory in channels and low demand with no signs of immediate recovery has OEMs panicking and cutting their orders drastically for 2022.”
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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